S&P 500 market breadth improved in late October, with more constituents returning above key moving averages. On Friday, 61% of index members traded above their 50-day average, the highest share since mid-August, while 57% stood above their 200-day average, the strongest reading since September 9. The rebound eases concerns that the index’s advance was being carried by only a handful of large technology stocks, but it does not yet point to a broad-based recovery across US equities.
More S&P 500 stocks move above key averages
Data shared by The Kobeissi Letter on October 24 showed the share of S&P 500 constituents above their 50-day average rose five percentage points on Friday. It has more than tripled from its intraday low on October 1. The proportion above the 200-day average gained three points, extending its increase over three weeks to 17 points—one of the three largest improvements in the past three years.
The Trading Tools reported a similar trend. As of October 23, 58.3% of S&P 500 constituents were above their 50-day average and 55.9% were above their 200-day average. The figures differ slightly between the two data sets, but both indicate that participation within the index has broadened recently.
Broader US equities still lag the large-cap index
In early October, as the S&P 500 approached a record high, fewer than one-quarter of its constituents were above their 50-day average. The divergence between the index and the majority of its stocks underscored how narrowly based the advance had become, with a small number of large companies providing much of the support.
The recent improvement remains more pronounced among large-cap stocks. The Trading Tools data showed that, as of October 23, 33.4% of all eligible US stocks were above their 50-day average and 38.2% were above their 200-day average—both below the corresponding shares for S&P 500 constituents. The recovery within the benchmark has therefore not yet spread fully across the broader US equity market.
The S&P 500 has been roughly flat over the past three weeks even as more constituents moved above their averages. On Thursday, the index fell 1.2%, but 335 of its stocks still finished higher, highlighting the gap between individual stock performance and the market-cap-weighted benchmark.
Improving breadth does not confirm a trend
Market breadth measures how many stocks are participating in a move. Because the S&P 500 is weighted by market capitalization, a few large constituents can lift the index even when many other stocks are weakening. A wider group of advancing stocks can indicate that an upswing has a broader base, but breadth alone cannot confirm that the index will keep rising or predict a market crash.
A weaker economy, disappointing corporate results or rising US Treasury yields could reverse the recent improvement. Technically, the S&P 500 faces resistance near its 50-day average at around 7,703, while the October 1 low near 7,617 is an important support reference. The index’s decline of more than 1% on Thursday shows that renewed breadth has not removed near-term volatility.