The S & P 500 is marching back toward record highs, and it’s not being led by megacap tech alone. More than 80% of S & P 500 stocks closed above their 50-day moving average last week — the most since April — Roth MKM chief market technician JC O’Hara pointed out. The equal-weighted version of the S & P 500 closed at a record, another sign of broadening market participation. The rally to record highs in July raised concern among many on Wall Street that the market was overly dependent on just a handful of tech stocks tied to the artificial intelligence trade. That’s not the case now. “Breadth is expanding,” said O’Hara in a note. .SPXEW YTD mountain S & P 500 equal weighted Index YTD The improving market breadth also triggered another buy signal followed by Ned Davis Research. Recently, more than 90% of the stocks tracked by the firm rose above their 10-day moving average. These events have been followed by a median rally of 8% that lasts about two months, chief global investment strategist Tim Hayes said. The S & P 500 ended Friday’s session just 0.6% below its all-time high of 5667.20 reached in mid-July. To be sure, Roth’s O’Hara noted the stock market was not yet out of the woods. He said the S & P 500 is pushing against key resistance levels. Ehat’s more, trading volume remains concerning. “We find the fuel behind the recent rally off the August 5th low has come from ETF trading. Typically, when ETF volume outpaces index volume, it’s a sign of uncertainty.” Elsewhere on Wall Street this morning, Morgan Stanley upgraded Petrobras to overweight from equal weight. “With changes now behind, we believe the noise level will gradually diminish, which could remove some of the volatility component,” the bank said. “The message of the new CEO and CFO in recent conference calls and meetings leads us to believe in strategy continuity, with the coexistence of a responsible increase in investments and dividend distribution, as long as there is spare cash availability.”
