US Market Breadth Flips Bullish: What It Means

The US equity market is showing a significant shift in its underlying texture, with the AltraOne platform's comprehensive analysis now signaling a Bullish regime. The overall Altra Market score, which reflects the percentage of stocks exhibiting strong bullish momentum across various timeframes, has surged to 71.3. This reading indicates a broadly healthy market breadth, suggesting that momentum trades are becoming increasingly viable for traders and investors.

Market Breadth Strengthens

Delving deeper into the market's structure, the data reveals a robust improvement across key technical indicators. A significant majority of US stocks are now trading above their crucial moving averages, which are widely used by technical analysts to gauge price trend. Specifically, 68.39% of stocks are above their 20-day Exponential Moving Average (EMA), a short-term trend indicator, while 70.38% are above the 50-day EMA, often seen as a medium-term gauge. Perhaps most reassuringly, 71.57% of stocks are trading above their 200-day EMA, a long-term trend proxy, indicating broad-based strength.

This positive breadth is further underscored by the market's daily advance/decline ratio, with 358 stocks advancing against 145 declining, suggesting that buying interest is outweighing selling pressure across a wide range of equities. The Altra Market score itself has seen a substantial increase, rising by 14.2 points over the last 15 days. This sharp upward trend in the market-wide momentum score reinforces the shift to a more favorable trading environment.

Sector Leadership and Rotation

At the sector level, the momentum picture is also evolving, providing insights into where strength is concentrated and where potential shifts are occurring. The Altra Sector score assigns a momentum rating to each sector and ranks them by relative strength, indicating which areas of the market are outperforming or underperforming. Currently, the US market features 4 bullish sectors, 1 neutral sector, and 6 bearish sectors out of 11, indicating a clear differentiation in underlying strength.

Energy remains the top-ranked sector, holding its #1 position. It's identified as a 'Confirmed leader' with accelerating momentum, suggesting continued strength. Financials have shown notable improvement, climbing two spots to #2. While 'Not yet confirmed,' its gaining relative strength indicates growing momentum. Health Care also maintains its 'Confirmed leader' status at #3, showing accelerating momentum.

However, not all leaders are accelerating. Industrials and Technology, while still 'Confirmed leaders,' are showing signs of cooling off, dropping three and holding steady at #5 and #6 respectively. This suggests their bullish momentum might be moderating.

On the other hand, some previously lagging sectors are beginning to show signs of life. Consumer Staples and Consumer Discretionary both climbed two and three spots respectively, now at #7 and #8. Though still 'Lagging,' the data notes they are 'starting to turn up,' which could indicate early signs of rotation or improving sentiment.

Conversely, Real Estate, Materials, Utilities, and Communication Services continue to lag, with their momentum weakening further or remaining subdued. Real Estate at #4, Materials at #9, Utilities at #10, and Communication Services at #11 underscore areas where broad-based bullish momentum is less prevalent.

The overall Altra Score for individual stocks (a 0-100 momentum score based on EMA alignment and RSI trend across daily, weekly, and monthly timeframes, where higher scores mean more bullish momentum) within these stronger sectors would be a key focus for traders looking to capitalize on the current market environment.

What is the Altra Market score? The Altra Market score measures overall market breadth — the proportion of stocks in an index trading above key moving averages. A score above 60 signals broad market participation and a healthy momentum environment. Below 40 signals broad weakness. It is updated daily after market close.

Track these scores daily on AltraOne — momentum analytics for NSE, S&P 500, and TSX, updated every trading day after market close.

Altra Score is a momentum indicator reflecting EMA alignment and RSI trend across daily, weekly, and monthly timeframes. It is not investment advice. Past momentum does not guarantee future performance. Please consult a SEBI-registered advisor before making investment decisions.