The market keeps printing all-time highs, so most investors assume the whole market is healthy and there is plenty of room left to run. The problem is that the index level alone does not show you how many stocks are actually doing the work.
In this video, I break down how I look under the surface using market breadth, the number of stocks trading above their moving averages. Instead of trusting the S&P at face value, which is cap-weighted and can be held up by just the MAG 7 while hundreds of other names quietly roll over, I show you how to pull up $SPX50 on any charting platform to see breadth on an equal-weight basis, plus the 20-day, 50-day, and 200-day readings over at stockcharts.com. I explain why readings near 80% have marked a lot of tops and readings below 20% have marked good bottoms, and I walk through the negative divergence building right now: the 200-day sitting at 66% against a ceiling around 70%, the 50-day rolling over near its own range top, and the market making higher highs while breadth makes lower highs. I also cover the soft end-of-summer seasonality and why this is a time to be patient, let these readings cycle back down, and wait for a clean pullback instead of chasing a tired move.
Your Profit Pilot,
TG Watkins
Henry Gambell went live last night to show how he uses unbalanced butterflies to target 0DTE opportunities with defined risk and a clear plan. Make sure to watch the replay if you did not catch it live!
