Breadth resurgence across various sectors
The sector rotation we witnessed over the past week has been a boon for U.S. market breadth. Small cap, financial, and energy stocks rebounded while tech slumped on a relative basis. As a result, the % of S&P 500 members above their 200 dma surged to a pre-pandemic high:
*Remember: a lack of breadth was considered a bearish factor over the past half year
Similarly, the % of S&P 500 stocks in a medium term uptrend (above 50 dma) is quite high:
When so many stocks were in a long term and medium term uptrend, the S&P 500 had a strong tendency to rally over the next year.
After languishing for much of the stock market's rally over the past half year, financials are attempting to catch up. As was the case with the S&P, the % of financial stocks in a long term uptrend jumped to the highest level since before the pandemic:
This led to more gains than losses for financial stocks over the next 2 months:
Perhaps more importantly, many small cap stocks surged higher:
A resurgence in breadth for small cap usually led to more gains over the next 3 months: