With the S&P 500 making a new all-time high this week, below is a check-up on underlying breadth as measured by the percentage of stocks trading above their 50-day moving averages. As shown, 82% of S&P 500 index members are currently above their 50-days. That’s a very strong reading that’s indicative of a market firing on all cylinders. Back in late March/early April, breadth was even stronger than it is now. 2015 was a year that saw extreme weakness in breadth levels even when the market was hitting new highs. Ultimately we saw two significant corrections in late 2015 and early 2016. Since the lows were reached in February, however, we’ve seen breadth surge above 80% twice, and we also made a “higher low” in breadth during the “Brexit” correction a couple of weeks ago.
Notably, seven of ten underlying S&P 500 sectors have breadth readings that are currently stronger than the reading for the broad index. Two defensive sectors — Consumer Staples and Utilities — still have the highest readings, but Technology, Energy, Health Care and Industrials are all cyclical sectors that have seen bullish increases in breadth lately. The only big sector that has a weaker-than-market reading is Financials, which currently has 65% of its stocks above their 50-days. Later this week we’ll get Q2 earnings reports for a number of big Financial firms in the S&P, which will hopefully provide some insights into how the sector will act in the coming weeks and months.