Bad Breadth for the S&P 500 Industry Groups?

The S&P 500 index closed yesterday at a stalemate between the bulls and bears with the index closing +11% from the 2018 lows but -11% from the 2018 highs. Analysts have been watching market internals like breadth and sentiment lately for clues as to where the market might be heading in the near-term. 

Bespoke Investment Group put out an interesting note today analyzing the breadth within the Industry Groups of the S&P 500. Much of what they found is signaling further downside for stocks, however, they found some bright spots in the analysis. First, they establish that it’s not a good sign that the S&P still hasn’t regained the 50-DMA yet, especially after the sharp rally we’ve seen in the past few weeks.  

They go on to explain:

“Not only is the S&P 500 still below its 50-DMA, but the majority of Industry Groups are still below their 50-DMAs as well.”

They include the table below to highlight the fact that only about one-third of the 24 Industry Groups are currently trading above their 50-DMAs. This isn’t the healthiest sign for the bulls. Typically one would want to see a broad participation from the Industry Groups in a sharp rally like the one we’ve seen in recent weeks.

They do, however, note that it’s encouraging to see all but two Industry Groups are positive year-to-date. Another bright spot they offer is that there's also a large number of Industry Groups that are not far from regaining their 50-DMAs. A strong close today could change this lack of participation from a majority the Industry Groups of the market. Check out the rest of the note from Bespoke here.