S&P 500 Breadth Checkup

Although the S&P 500 is within 1% of its closing high, breadth in this recent rally has been lagging. As of today, the Cumulative A/D line for the S&P 500 since September 2008 is at 778, which is 571 below the highs from October. Given the fact that days where the S&P 500 has a 1% gain typically see a net A/D reading of about +300, it is likely that if we get a rally to new highs, it will not immediately be confirmed by breadth. Therefore, if the S&P 500 does manage to rally to a new closing high, investors with cash already on the sidelines may want to wait for breadth confirmation before putting any new funds to work.

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