In our last note, we highlighted the importance of breadth for both bulls and bears in the market. The bulls needed to see an improvement from recent dodgy numbers, and that is exactly what played out.
However, breadth was not the only story of the week. The bulls received an added boost as the Dow Jones Transportation Average reversed higher. At the same time, we saw broader bullish performance as the Equal Weight S&P 500 outpaced its Cap Weight sibling. All in all, the bulls got exactly what they needed to keep the benefit of the doubt.
S&P 500
The S&P 500 closed the week above the rising 60-week moving average, though it has not really been at risk, despite choppy trading over the past two-plus months. Perhaps the most encouraging dynamic in trading last week is the fact that the opening print was the low of the week. Taken a step further, bulls can be encouraged by the fact that the close of the week was very much near the high of the range.
Source: Optuma
NYSE Advance/Decline Line
Entering the week, the biggest concern for the Advance/Decline Line was the fact that the one-year stochastic had broken decisively below the 80% mark. However, strong breadth over the course of last week’s trading brought the stochastic back to this key level.
The bullish case becomes stronger should the A/D Line take out recent highs.
Source: Optuma
NYSE Net New Highs
In addition to seeing more stocks go up last week, we also saw a return of more stocks on the NYSE making new highs than making new lows. Net new highs were positive every day of the week.
Source: Optuma
Dow Jones Transportation Average
Last week also saw an improvement in a key intermarket theme. The Dow Jones Transportation Average regained the rising 27-week moving average to remain in a bullish trend.
Source: Optuma
S&P 500 Equal Weight vs. Cap Weight
In a welcome reprieve within a strong bearish trend, the Equal Weight S&P 500 outpaced the Cap Weight index last week. Make no mistake, the market remains dominated by the largest stocks, but it is encouraging to see a rebound from the 2024 low.
Source: Optuma
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