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Breadth

Soft landing calls for tough choices2023 has been a tough year for stock pickers. The gap between equity factor styles has been vast over H1. Growth, riskier in nature, posted the best performance up 24% year-to-date (YTD) followed closely behind by quality up 20% YTD1. The excitement around artificial intelligence (AI) reached a fever pitch in H1 2023, supporting growth-oriented technology stocks. As we enter H2 2023, we remain constructive on select areas of global equity markets. The resilience of the US economy has defied all odds. The strength of the US consumer (accounting for 70% of GDP), alongside the fiscal impulse, has been the cornerstone of the US’ extraordinary resilience. While inflation has shown encouraging signs of decline in the US, strong economic momentum alongside a rebound in commodities raises the risk of a re-acceleration of inflation. In turn, rates could remain higher for longer, resulting in Federal Reserve (Fed) rate cuts being delayed until Q1 2024. In such an environment, an enhanced equity income approach could fit well. Even if the earnings outlook weakens in China, proactive policy support via rate cuts could support its stock multiples. In Europe, where we are likely to witness a mild recession, we believe adopting a more cautious and defensive approach is warranted. Earnings revision ratios remain the strongest in Japan while they are the weakest in emerging markets. US equities are the belle of the ball It was the narrowest market in history, with just 25% of stocks outperforming the S&P 500. Expectations of cooling inflation aiding the Fed to end its current tightening cycle supported the performance of higher-duration growth stocks. For investors calling for a soft landing, rates are likely to remain at current levels or higher for a longer duration of time. A tight US labour market, with unemployment at historic lows and rising wages, is likely to slow the downward pricing momentum in the service sector. As the market regime transitions, it should provide a ripe opportunity for market breadth2 to improve. Markets may begin to favour value and dividend-paying stocks. History has shown us that breadth tends to improve as the economy recovers from a downturn. Peak pessimism towards China China’s reopening rebound has faded. The transition to a less debt-fuelled, less property-reliant and more consumer-driven economy is an important adjustment. We expect government stimulus policies to be aimed at enhancing the efficiency of the private sector. Further iterations of policy rate cuts by the People’s Bank of China (PBOC) are likely to follow; however, outright quantitative easing won’t be on the cards, as it is likely to further weaken the yuan, which the PBOC would like to avoid. With a low correlation to US equities (at 20x P/E)3 coupled with a high valuation discount, pockets of China continue to provide good investment prospects. Pockets of opportunity in non-state-owned enterprises Non-state-owned enterprises, particularly within the Technology, Communication Services and Health Care sectors, faced the brunt of China’s regulatory crackdown. These regulatory interventions stifled growth in key sectors such as e-commerce, mobile payment, ride-hailing, and online education. It also resulted in the suspension of initial public offerings (IPOs) and delisting of Chinese internet companies. Growing political frictions in supply chains are incentivising China to regain independence in the semiconductor and hardware space. Chinese technology companies are trading at a significant discount compared to US peers, offering plenty of room to catch up. Prefer defensives over cyclicals as Europe runs out of steam Nearly six months back, investors marvelled at how the euro-area economy had emerged from the energy crisis. That momentum appears to be fading as China’s recovery slows down, consumer confidence declines, and the impact of tighter monetary policy gains a stronghold on the economy. Higher inflation over the past year is holding back demand from households, which is hurting growth. The monetary tightening over the past year not only triggered an increase in real rates, it also impacted borrowers’ credit metrics. Owing to this, eurozone banks have tightened their lending standards.4 Banks remain the primary source of corporate funding in Europe. The credit impulse—that is, the annual change in the growth of credit relative to GDP—in the euro area reached its lowest point since 2010. TINA is alive in Japan There is no alternative (TINA) to equities is still alive in Japan. This is evident from higher equity risk premiums of 2.97% for Japan compared to 0.41% in the US.5 While the rest of the world has been busy trying to quell the inflation fires, Japan has emerged from the COVID-19 lockdowns with a faster pace of growth and higher inflation. A combination of higher equity risk premiums, a weaker yen supportive of the Japanese export market, corporate reforms, and attractive valuations have been important catalysts for equities. Policy shift still remains loose The Bank of Japan (BOJ) took a significant step towards normalisation in July by announcing a further adjustment to its yield curve control (YCC) regime. The BOJ formally changing its course constitutes an acknowledgement that inflation is returning to the Japanese economy. Yet the BOJ lowered its (median) inflation forecast for fiscal year (FY) 2024 to +1.9% and left its FY 2025 projection unchanged at +1.6%, in effect justifying ongoing easing by the BOJ. With Japan’s nominal growth rising over the coming years, the revised policy by the BOJ still remains loose, supporting the case for Japanese equities. Historically, a weaker yen has benefitted the performance of Japanese exporters as it enhances their competitive advantage. Adopting a tilt towards dividend-paying Japanese equities is likely to reap the benefits of not only a weaker yen but also corporate governance reforms. Conclusion As we progress into year-end, the outlook remains more nuanced. In the US, we favour value and dividend stocks as equity market breadth improves. While China’s problems in the housing sector are likely to remain a drag on domestic demand, we do see pockets of opportunity in undervalued sectors – technology and healthcare. Given the strong manufacturing headwinds facing Europe, we expect weak growth in the eurozone for the remainder of 2023, potentially favouring a tilt towards defensive stocks. Sources 1 Bloomberg as of 11 October 2023. 2 Breadth is measured by comparing the equal weighted performance versus the market cap-weighted performance of the US stocks listed on the S&P 500 Index. 3 P/E = price to earnings ratio. 4 Euro area Bank Lending Survey (BLS), April 2023. 5 Bloomberg, WisdomTree, as of 29 September 2023. Equity risk premium is the difference between the earnings yield and the respective 10-Year Government Bond Yield. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
SP:SPX
by aneekaguptaWTE
✅ UPDATE 5: Whaley Breadth SignPostThis is update 5 for the Signpost after the Whaley Breadth idea post in Feb'23 If you remember The Whaley Breadth Trust is a powerful signal that has a great success rate. It was invented by Wayne Whaley in 2009. Since 1970 to 2009, the signal has occurred only 12 times! 🛠️ INDICATOR For my followers, I even made a special indicator for the Whaley Breadth here: 🆕 UPDATE We are seeing constructive action from the SP500 and we can see that we are catching up with the 6month mark on the +17% from the bottom. This is very encouraging as the signal projects up to +28% as per the January Trifecta (look to my older notes to understand more). We are however running in some seasonal dormant period and it will be interesting how we are going to make the H2 2023.
SP:SPXLong
by TintinTrading
🟨 UPDATE 4: Whaley Breadth SignPostThis is update 4 for the Signpost after the Whaley Breadth idea post in Feb'23 If you remember The Whaley Breadth Trust is a powerful signal that has a great success rate. It was invented by Wayne Whaley in 2009. Since 1970 to 2009, the signal has occured only 12 times! Based on the Whaley Breadth Post and January Trifecta we drew a potential map for the next 3, 6 and 12 months. For my followers, I even made a special indicator for the Whaley Breadth here: UPDATING: We have had a strong rally up since our last update in May28. This has brought us very close to our signposts, but of course some of the deadlines have been missed. This is to say that we are moving in the right direction as per the historical indications but slower than the averages that I have used. Make sure you check my previous posts about the Whaley Thrust as how they are developing.
SP:SPXLong
by TintinTrading
2
SPY Analysis - Market Breadth, Fed Rate Cycles, and InflationI measure the breadth in the S&P as the SPY (market cap weighted S&P) divided by RSP (equal weighted S&P ETF). The higher the ratio, the more concentrated the market, and therefore less market breadth. As can be seen, nearly every time the ratio has neared 3.0, the Fed has ensued with an easy money policy, and the SPY subsequently turned bullish. During these times, Fed rates, as well as inflation, were relatively low. There are several exceptions. in November and December 2021, the ratio neared 3.0 at 2.97, and the Fed ensued in early 2022 with an historic rate tightening cycle, on the heals of persistent inflation of 4.7 percent in 2021 which had resulted (and continues today) from the massive COVID stimulus program. The end result was the selloff in we experienced in 2022. Another exception was the period from 2015 to 2019, when rates were gradually raised, but maxed out at 2.40 in a relatively low inflation environment. This is not the environment that we are in today. Today, we have already had a 50 - 61% retrace from the low posted in October, 2022, and the market breadth is again at a low (SPY/RSP=3.00) . The Fed now has the option of pausing/easing and in effect pump a bull, but by doing so it will face a huge dilemma: with an annual inflation rate of 8 percent, and the largest budget deficit in modern history, a return to easy money will further fuel inflation. The other option would be to continue the rate hikes, and promote an economic collapse (starting with the banking sector), which will effectively bring the breadth issue to rest (along with the entire market). Neither of these are good options. Bitter pill...
AMEX:SPY
by UnknownUnicorn13101
❌ UPDATE 3: Whaley Breadth SignPostThis is update 3 for the SignPost after the Whaley Breadth Post. If you remember The Whaley Breadth Trust is a powerful signal that has a great success rate. It was invented by Wayne Whaley in 2009. Since 1970 to 2009, the signal has occured only 12 times! Based on the Whaley Breadth Post and January Trifecta we drew a potential map for the next 3, 6 and 12 months. For my followers, I even made a special indicator for the Whaley Breadth here: UPDATING we see that the SPX failed to follow the map on both the pullback and the expected 3 month gain. However, we also see that there is more tightening action than anticipated, rather than complete capitulation. The second pullback measures about -6.2% rather than the anticipated -5.5%. But rather than appreciating to +12% the SPX appreciated only +6%. I would conclude that the current Whaley Breadth SignPost has failed on two accounts. Will continue to watch its development but so far it is not performing as expected.
SP:SPX
by TintinTrading
Market Breadth shows downside singals...The chart shows the S&P500 Future, continiues contract ES1!. Below you see the charts of the percentage of stocks which above their 50, 100, 200 SMA. I watch this market breadth indicator closely to see the if a trend is just based on a few big stocks or is "the flow lifting all boats". What I observe now is that we hat a similar situation in the indicators at the top in December 2022, before we had a 1 year down move... On top I see a potential bearish divergence in the MACD. CME_MINI:ES1!
CME_MINI:ES1!Short
by Cashflowjaque
🟩 Whaley Breadth Thrust Signal - SignPostsWhat can help us guide forward expectations? According to the Whaley Breadth Thrust Signal there is Normal and Abnormal action FIRST 6 WEEKS (end Feb) - 3-5% pullbacks would be normal FIRST 12 WEEKS (end Jul) - Forward Gains are approximate 12% - 5-6% pullback would be normal 6 MONTHS Forward - Forward Gains are approx +17% I HAVE MADE THE WHALEY BREADTH INDICATOR FREE FOR ANYONE WHO WANTS TO ACCESS IT. GRAB IT IN THIS LINK: JANUARY TRIFECTA after a down year - Forward Gains are approx. +28%
SP:SPXLong
by TintinTrading
1
Market Breadth 2023-01-24The main focus is on setups and scan outcome, that will provide viable opportunities. Market Structure : Duration bearish market (stocks move in tandem, occasional oversold rallies) Primary Indicator : Green (bullish continuation and bearish reversals are favorable) Secondary Indicator : Breadth thrust 12 Jan / Countermove attempt 18 Jan. Current MMFI: 71.11 MR10 : No New Focus. SPY (55 MBC) - QQQ (83 Exuberance) - IWM (56 MBC) 20 percent study : +44/-8 Conclusion : Bullish last session with some excessive momentum to the upside. At the moment minor overextension in NQ as presented from MMFI and MR10, however not in terms of extreme. Market can continue but from intuition price action seems frothy. Will be considerate at initial 30-45 minute of open and act based on provided movement, expectation of consolidation or corrective move short term.
AMEX:SPY
by Market-Core
Market Breadth 2023-01-23The main focus is on setups and scan outcome, that will provide viable opportunities. Market Structure : Duration bearish market (stocks move in tandem, occasional oversold rallies). Primary Indicator : Green (bullish continuation and bearish reversals are favorable). Secondary Indicator : Breadth thrust 12 Jan / Countermove attempt 18 Jan. Current MMFI: 67.70. MR10 : Bullish Continuation - Midpoint. SPY (30 MBC) - QQQ (51 MBC) - IWM (35 MBC) 20 percent study : +27/-6. Conclusion : Bullish expansion and acceleration in last session, which seems to indicate continuation. Move is not considered at the start, neither overextended as presented from MMFI and MR10. Will run 9 million and combination scan with a positive expectation. In terms of DT will be considerate at 30-45 min of open and observe whether momentum will accelerate or not; due to intact market theme and selective gaps.
AMEX:SPY
by Market-Core
Market Breadth 2023-01-20The main focus is on setups and scan outcome, that will provide viable opportunities. Market Structure: Duration bearish market (stocks move in tandem, occasional oversold rallies). Primary Indicator : Green (bullish continuation and bearish reversals are favorable). Secondary Indicator : Breadth thrust 12 Jan / Countermove attempt 18 Jan. Current MMFI = 64.56. MR10 : Focus is bullish continuation. SPY: -22 None QQQ: -2 bullish continuation + Mean IWM: 0 bullish continuation + Mean 20 percent study : +22/-7. Conclusion : Yesterday weakened acceleration in the downtrend followed with some upside momentum which also is represented in PM, possible bullish short term. Will run 9 million, combo scan and be selective. DT in case market indicate acceleration to the upside. Yesterday indecisive candle as break reference, observant first 30-45 min of open.
AMEX:SPY
by Market-Core
2
Market Breadth 2023-01-19Index : Duration bearish market (stocks move in tandem, occasional oversold rallies). Primary Indicator : Green (bullish continuation and bearish reversals are favorable). Secondary Indicator : Rare bullish breadth thrust 12 Jan. MMFI >72 (overbought or bullish acceleration in market turn). Countermove attempt 18 Jan. MR10 : SPY (-4 None) / QQQ (21 bullish continuation) / IWM (25 bullish continuation) = Recommended new focus is None. 20 percent study : Up 43 (extended movers, indecisive candle) and down 10. Conclusion : This bullish move happened unlike previous ones (without oversold condition / market new low). The breadth has been very bullish, was however inclined to hit a wall which happened 18 Jan, which in advance had a proper reversal indication. Whether we continue with a minor correction towards the mean and consolidate (rest of week) before upside or break into new lows are hard to tell at this point. Based on historic price action we will continue lower (bounce into breakdown), but this move happened outside these conditions so be attentive. Actionable : Primary indicate bullish continuation / bearish reversal and most point toward the latter on the short term. Will focus on daytrading with decreased size and wider stops (fade risk has improved). Will only hold top quality setups from the 9 million scan.
AMEX:SPY
by Market-Core
1
S&P 500 SPX SPY ES1! Breadth (S5FI) & (S5TH) - Updated 011623Looking at the latest S&P 500 SPX (SPY ES1!) "Breadth" data , including Stocks Above 50-Day Moving Average (S5FI) & Stocks Above 200-Day Moving Average" (S5TH) — this is yet another indicator that we have been tracking since the start of the market downturn (correction/bear market) in late 21' / early 22' as it has helped to signal buy/sell signals. Here's what you'll find on this chart: 📊 Top Section Stocks Above 50-Day Moving Average (S5FI) = Blue Line: *CHART NOTE* Pay close attention to the horizontal (Blue Dotted Line), which signals/coincides with relative tops in breadth that match the SPX resistance. Stocks Above 200-Day Moving Average" (S5TH) = Orange Line: *CHART NOTE* Pay close attention to the horizontal (Orange Dotted Line), which signals/coincides with relative tops in breadth that match the SPX resistance. Bottom Section S&P 500 SPX (SPY ES1!) = Teal Line Support/Resistance (Bear Flag Pattern) = Vertical Red Lines Pay close attention to the (Red Dotted Lines), as these mark relief rally tops in the SPX (SPY ES1!). Conindiencely enough, these "alignments" of technical signals closely match the resistance (Red Line) that is now sitting around $4,000 S&P 500 SPX (SPY ES1!). What do you think about this S&P 500 SPX (SPY ES1!) contrarian (sell) indicator? 📈📉 Let me know your prediction in the comments below! 👇🏼
INDEX:S5FIShort
by kylemusserco
2
NYSE Composite Index WeeklyA breadth measure, the weekly has broken the down channel and survived a retest and is above the cloud. Similar pattern for SOX, XLF, and XLI. Keep a watch on the trend, it is a good tell for market direction. The NYSE Composite Index is a stock market index that includes all common stocks listed on the New York Stock Exchange (NYSE). It is calculated using a market capitalization weighted methodology, meaning that the weight of each stock in the index is based on its market capitalization, or total value of all outstanding shares. The NYSE Composite Index is considered a broad market benchmark, and is used to track the performance of the overall stock market. It is different from other stock market indices such as the Dow Jones Industrial Average or the S&P 500, which only include a subset of the stocks listed on the NYSE.
TVC:NYA
by UnknownUnicorn13101
$SPX June bottom test. Up now or 40pts lower to weekly 200ma.Many people are wondering when the bottom will be in. Twitter pundits offer various reasons for a short-term rally. While those reasons may be logical and tradeable under normal circumstances, the market has yet to give us any confidence that a near-term bottom is in. Interestingly (or alarmingly) SPX made a bullish reversal open today, only to form a bearish engulfing candle. Though remember, outside candles only trigger more selling if the low is broken, so that remains to be seem tomorrow. This chart presents a unique view of SPX using Heikin Ashi candles. White arrows mark turning points that correspond with RSI(14) dipping below 30. In the bottom pane I have included MMTH, a market breadth indicator. If you look back further on a weekly chart, MMTH normally is reliable for a turning point in markets. While I would like to give weight to the bullish reversal today and think that markets will rally again in the next few days, I am using extra caution in my trade planning. Unfortunately, it seems this time around is not the "normal" that most traders are used to. Do not become biased by posts about historical matches and repeat patterns.
SP:SPX
by OptionsRising
4
S&P 500 Breadth Still in DeclineIt looks like SPX monthly is going to end September with a capitulation candle below support. I was expecting the September candle to close on the support base. Put options are still on the rise. Have to keep an eye on the yield curve at the short end. The very short end of the curve is still too steep to see a big downside potential in stonks. I think that might be why there is a lack of VIX call buyers. Lets see next mth. If the Fed is going to keep hiking until the very short end of the curve kicks up, then we could see some heavy downside in stocks yet to come in the next few years, with periods of bear rally's.
FX:SPX500
by TheTradersBias
1
Breadth has been strong and this week will be critical for $RSPThe market as a whole needs this rally to have healthy breadth and so far that's what it looks like is happening, a broad-based rally. It closed above its 200 DMA for the first time since April 21st (albeit by just 13 cents) which is also when the downtrend started. The downtrend has been thoroughly broken. Looking for 2-3 more strong daily closes above the 200 DMA to be relatively certain that the rally will continue and we could be back in a bull market.
AMEX:RSP
by EBITDAtiger
Submitted for your approval,Submitted for your approval, one ADVDEC.US , a drab and undistinguished breadth index that made history last Friday, May27th 2022. On any given day, ADVDEC shows the number of stocks advancing minus the number declining. Last Friday the index made the highest reading of its 12 year history. At the time of writing both bulls and bears argue how this information merely confirms what they already know will happen next week. One side will soon discover a traders true nemesis, certainty - said lesson to be learned in The Twilight Zone. Note: 1. The suffix "US" means across all available US markets including NYSE, NASDAQ and the Dow. Individual reading can be found at USI:ADVDEC.NY , USI:ADVDEC.NQ , and USI:ADVDEC.DJ
A
by gb50k
1