SPX Strengths and Weakness: Breadth and Internals

Long term uptrend appears to be very much in tact.

We see a trend of sell offs on news that seem terrible at the time for markets but are only generating mid 4%-5% selloffs with relative quick recoveries. A big contrast to the 20%+ selloff at the start of the pandemic.

This market has seemed to be characterized by pandemic news taking sudden dips in September and and in November both correlated more with infection rates than fundamentals. The 50 day MA has not played a large support role. 

The market appears to have double topped but not confirmed since it did not fall below the 450 low.

Key levels on the downside:

$450 area and $430 area (200 dma)

Market Breadth 

Simply put, the number stocks participating in this market is diminishing. 92% of stocks were above their 50 day moving average in April. Since then the market has climbed higher with less participants. The number of stocks continues to fade after each new high. 

There has been a sharp drop in the past month as the market tries to form a high base.

It doesn't mean the end of the bull market but could signal structural weakness.