Two-thirds of stocks across the S&P 500, S&P 400, and S&P 600 are now trading above their 200-day moving averages. That means broad participation is showing up across large caps, mid caps and small caps at the same time.
Here’s the chart:
Let's break down what the chart shows:
The black line in the top panel shows the S&P 500.
The blue line shows the percentage of S&P 500 stocks trading above their 200-day moving average.
The grey line shows the percentage of S&P 400 stocks trading above their 200-day moving average.
The red line shows the percentage of S&P 600 stocks trading above their 200-day moving average.
The Takeaway: Two-thirds of stocks across large caps, mid caps and small caps are now trading above their 200-day moving averages.
That is broad participation, not one narrow pocket of leadership carrying the rest of the market.
Across the market-cap spectrum, more stocks are moving back into long-term uptrends.
Large-cap breadth is at its highest level since December 2024. Mid-cap and small-cap breadth are both at their highest levels since November 2024. Different parts of the market are improving together.
That gives the market better support beneath the surface. When more stocks are above their 200-day moving averages, buyers have moved beyond the obvious winners. So, the opportunity set is getting wider.
And that changes how I want to look at the market. When participation is narrow, stock selection is difficult because fewer names are doing the work. When participation broadens across large, mid and small caps, there are more stocks to compare, more sectors to study, and more opportunities.
This is also where sector rotation becomes important. Technology has cooled after leading much of the rally, but Financials, Utilities, Real Estate, Energy, Health Care and Industrials have stepped in. Leadership is changing, but participation is improving.
That is the difference between a market losing strength and a market rotating through leadership. In a weak market, fewer stocks participate. Here, more stocks are reclaiming long-term uptrends while new sectors take on leadership.
So I’m treating this as confirmation. I’m spending my time in the areas where participation is improving and leadership is emerging, looking for high-quality stocks breaking out.
When two-thirds of the market is in long-term uptrends, I don’t want to argue with the evidence.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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