The 5,000 degree for the S & P 500 looks like a foregone conclusion given the energy of mega-cap development shares, the renewed fervor for any title associated to AI, and rising energy in different sectors together with well being care and financials. A robust November and December have been adopted by a fair stronger January, and this earnings season has propelled main names like Nvdia and Meta to even higher heights. However as a lot as a market can advance as a result of energy of management names, market breadth measures inform us extra about all the opposite shares in our main indexes. This method is usually described utilizing army terminology: the generals are doing nice, however what concerning the infantry? This chart reveals the p.c of S & P 500 members above their 200-day transferring common (second panel) in addition to the p.c of S & P 500 members above their 50-day transferring common (backside panel). Typically talking, the p.c of shares above the 50-day transferring common represents extra of a short-term gauge, as a result of when a inventory continues to be in a major uptrend however experiences a pullback it is going to would hit this transferring common first. Conversely, the p.c of shares above the 200-day transferring common is a greater long-term gauge, because it takes a way more vital drawdown for a inventory to interrupt down under this long-term pattern barometer. The S & P 500 itself (high panel) is nicely above its personal transferring averages, talking to the energy of this market setting off the October 2023 low. Be aware how each the p.c of shares above the 50-day and 200-day transferring averages pushed above the 50% degree in mid-November, confirming that many shares have been experiencing an identical rise. By mid-December, nevertheless, we noticed about 90% of S & P 500 shares above their 50-day transferring common (pink shaded space), suggesting that just about all the things was in a confirmed uptrend. Lack of breadth assist In order the S & P 500 exams 5000 this week, how assured ought to we be about additional upside for shares? I’ve positioned crimson vertical strains on the three earlier occurrences the place we noticed 90% of shares above their 50-day transferring common earlier than the indicator moved again under 50%. This could point out that about 40% of the S & P 500 members had damaged under their very own 50-day transferring common, in different phrases, a critical lack of breadth assist. In every of those three situations, the S & P 500 moved even decrease earlier than finally discovering its footing and bouncing again increased. One key distinction this time round is that the S & P 500 itself is transferring increased. In these different three situations, the benchmark was really transferring decrease because the breadth readings have been deteriorating. However the message of the chart stays the identical. If we see lower than 50% of S & P 500 members remaining above their 50-day transferring common, additional upside above the important thing 5,000 degree looks like an unlikely situation earlier than a extra significant pullback for shares. -David Keller https://www.marketmisbehavior.com DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click on right here for the total disclaimer.