Money Control Place
  • Politics
  • Business
  • Stocks
  • Investing
  • Politics
  • Business
  • Stocks
  • Investing

Money Control Place

Stocks

Price Pays… But For How Long?

by June 21, 2024
June 21, 2024
Price Pays… But For How Long?

While the S&P 500 continues to move higher, the number of stocks participating to the upside continues to decline. In other words, market breadth is deteriorating. However, it has been doing that for quite some time already, and, as we all know, we should not swim against the tide.

Nevertheless, I have become increasingly interested in the continued narrowing of market breadth over the past few weeks.

Declining New 52-week Highs

One of the first charts in my chart list is a chart of the S&P 500 with the new 52-week highs.

The decline in new 52-week highs is very visible. In and of itself, it is not a major sell signal, as this metric can decline while the market moves higher for quite some time; for example, in the second half of 2021. The peak in new 52-week highs occurred in May-June and then declined into December while the S&P powered higher.

However, what we can learn from this decline is that the base and the foundation for the rally are getting narrower. Fewer stocks are participating to the upside.

Declining % of Stocks above 200-, 50-, & 20-Day Exponential Moving Average

Other metrics to measure market breadth and participation are indicators that track the percentage of stocks above a moving average. At StockCharts.com, we track these percentages for the major indices and sectors for 20-, 50-, and 200-day exponential moving averages.

The chart above shows these metrics for the S&P 500 index. I plotted the individual indicators and then overlaid a 10-week moving average on each to gauge the trend. All three have started to come down from elevated levels and are now moving lower, while the S&P is still moving higher.

As said, this in itself is not extremely alarming, but something to be aware of. Remember, we are trying to piece together the pieces of the puzzle the market is giving us each day.

Plotting on a Relative Rotation Graph

However, as we have these indicators for the individual sectors, we can also plot them on a Relative Rotation Graph.

The RRGs below show the relative rotation for these indicators (200-day, 50-day, and 20-day) against the respective indicator for the S&P 500.

On the 200-day version, we find quite a few tails still on the right-hand side of the graph, but most have rolled over and/or turned to a negative RRG-Heading. Only !GT200XLK is still at a strong heading and moving further into the leading quadrant.

On the 50-day version, the tails have moved further left, indicating weakening across the board (lower RS-Ratio readings). !GT50XLK is inside, leading and moving further into it.

Finally, on the 20-day version, things are a little more pronounced, with a few tails really accelerating into the lagging quadrant. Some mild improvement is found for XLF and XLI across all three MA periods.

So, the main takeaway is that the majority of sectors are seeing their percentage of stocks above one of the moving averages declining faster than the percentage of stocks above these MAs for the S&P 500. Technology goes against this trend, and Financials and Industrials have a mildly improved reading.

Using $ONE as the Benchmark

Running these same universes on Relative Rotation Graphs but swapping the $SPX benchmark to $ONE gives us the absolute trends comparison for these metrics. The main observation on these RRGs is that pretty much all tails are clustered on the left-hand, negative side of the graph. This indicates that most of these indicators are trending lower.

And SPY continues to move higher…

And all that while, the S&P 500 continues putting in new highs.

Looking at the S&P chart in combination with RSI and MACD, we see that RSI and MACD are still below their previous peaks, keeping the possibility of a negative divergence alive.

We all know that “price pays!!” but, in the current environment, I can’t help asking myself, “But for how long?”

StayAlert, –Julius

0
FacebookTwitterGoogle +Pinterest
previous post
Market Stumbles Near The Edge of a CLIFF
next post
Investing with the Trend: Conclusions

Related Posts

Fed’s Rate Pause: Does It Really Change the...

June 15, 2023

In Bullish Trends, Seek Value and Momentum; Three...

November 13, 2023

Powerful Entry Strategy Using One Moving Average

May 16, 2024

MEM TV: Are the Magnificent Seven Ready to...

October 28, 2023

NVDA SCREAMS BULL With Earnings Breakout

February 23, 2024

Top 3 Pitallfs YOU Probably Make When Trading

July 13, 2023

The Best Leading Indicator for Stocks

March 23, 2024

Two Down and Two to Go – Capitulation...

May 4, 2025

Top 10 Stocks to Watch April 2024

April 20, 2024

Decoding 10-Year Treasury Yields: A Monthly/Secular Perspective Overview

February 22, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • 3 S&P 500 Charts That Point to the Next Big Move

    • Joe Rabil’s Undercut & Rally Pattern: From DROP to POP

    • Prospectus

    • Critical Metals Secures US$120 Million Loan LOI for Tanbreez Rare Earths Project

    • Mali Court Seizes Control of Barrick Gold Mine Amid Escalating Dispute

    • Galan Lithium Limited: A$20 million Placement to Strategic Partner

    Categories

    • Business (1,256)
    • Investing (2,578)
    • Politics (3,699)
    • Stocks (1,667)
    • Uncategorized (20)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: MoneyControlPlace.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 moneycontrolplace.com | All Rights Reserved