{"id":202278,"date":"2025-02-18T10:53:49","date_gmt":"2025-02-18T15:53:49","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/uncategorized\/chart-advisor-examining-breadth-improvement\/"},"modified":"2025-02-19T16:16:43","modified_gmt":"2025-02-19T16:16:43","slug":"chart-advisor-examining-breadth-improvement","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/chart-advisor-examining-breadth-improvement\/","title":{"rendered":"Chart Advisor: Examining Breadth Improvement"},"content":{"rendered":"\n<p>By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=50219b36d17c4c0e854a2e2235acd2f9&amp;_e=XSZ8CCe-Oxe0DDyjL1CXJdRJXqU9XcAxtH9E7o_LN-YL8CNx8eqixxwnVo2c9IuREQtOX-mT1DDnLW5BTYHssywoRh_nRE-OlpXeXqSRKD-MFncaemPGYzG7fxxqk6To1ESTfe7Ot_piAOkekfBHqPmHAEWbvy9ZbSX_0iJ8NYf-x_D8h39yfZXaybhwg-pK3mm-_HrOOTBQto3l1fw2zlp1KHZHuabREKwJhjaabXIgV5qp6fuGgAKWexhNUSbU0UZEhN1yII5I_af58z1cExKoFB0bV9_pLV7PxIlDnb62Z4pg2O74L47mXHN3jHfl1KMcISGnvvyr7nga1ul74KSeTF1tusdACtB92L0yuFlLG0jmQ5znt260_Kj3DaUsOvsGAg6SqHNjVKWueJnBUrAIMJD7R1BHKoZRbI_GGB4wm12RYIb8jEhrp3YtzenKcuU7trV8NWyCJ35QzQiI6A%3D%3D\" target=\"_blank\" rel=\"noreferrer noopener\">Shane Murphy, CMT<\/a><\/p>\n\n\n\n<p><strong>1\/ Strong Breadth &amp; Equal Weight<\/strong><\/p>\n\n\n\n<p><strong>2\/ Discretionary vs. Staples<\/strong><\/p>\n\n\n\n<p><strong>3\/ Growth vs. Value<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with CMT Association on this newsletter. &nbsp;The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1\">1\/<\/h2>\n\n\n\n<p><strong>Strong Breadth &amp; Equal Weight<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/m\/market_indicators.asp?hid=6b90736a47d32dc744900798ce540f3858c66c03&amp;did=16569401-20250218&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021825\" target=\"_blank\" rel=\"noreferrer noopener\">Moving average breadth<\/a>&nbsp;is improving and recovering off the lows to start the year. 59% of S&amp;P 500 companies are now trading above the 200-day average. This breadth indicator strongly correlates to the ratio of S&amp;P 500 Equal-weight vs. S&amp;P 500 Market-cap Weight.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"809\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/02\/tXghzUp5-1100x809.png\" alt=\"\" class=\"wp-image-202282 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/tXghzUp5-1100x809.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/tXghzUp5-700x515.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/tXghzUp5-300x221.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/tXghzUp5-768x565.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/tXghzUp5-1536x1130.png 1536w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/tXghzUp5.png 1794w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/809;\" \/><\/figure>\n\n\n\n<p>Past performance is not indicative of future results<\/p>\n\n\n\n<p>If breadth is improving and more stocks are in healthy uptrends, one could assume equal-weight is outperforming market-cap weight. Historically, some of the strongest spurts of equal-weight outperformance followed an expansion of moving average breadth. Something to keep an eye on in 2025!&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2\">2\/<\/h2>\n\n\n\n<p><strong>Discretionary vs. Staples<\/strong><\/p>\n\n\n\n<p>One of my favorite gauges of investor risk appetite is the price ratio of Consumer Discretionary to Consumer Staples stocks. Typically, new highs are meant to signal increased risk appetite among investors i.e. investors are bidding up cyclical stocks and selling defensive stocks. However, the ratio is trading +3 standard deviations above the 3yr average. In recent years, this level has signaled muted forward 12-month price returns.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"809\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/02\/30X2zjSc-1100x809.png\" alt=\"\" class=\"wp-image-202281 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/30X2zjSc-1100x809.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/30X2zjSc-700x515.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/30X2zjSc-300x221.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/30X2zjSc-768x565.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/30X2zjSc-1536x1130.png 1536w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/30X2zjSc.png 1794w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/809;\" \/><\/figure>\n\n\n\n<p>Past performance is not indicative of future results<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3\">3\/<\/h2>\n\n\n\n<p><strong>Growth vs. Value<\/strong><\/p>\n\n\n\n<p>The definitions of&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/g\/growthstock.asp?hid=6b90736a47d32dc744900798ce540f3858c66c03&amp;did=16569401-20250218&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_mediuhttps:\/\/www.investopedia.com\/terms\/g\/growthstock.asp?hid=6b90736a47d32dc744900798ce540f3858c66c03&amp;did=16569401-20250218&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021825m=email&amp;utm_content=021825\" target=\"_blank\" rel=\"noreferrer noopener\">growth<\/a>&nbsp;and&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/v\/valuestock.asp?hid=6b90736a47d32dc744900798ce540f3858c66c03&amp;did=16569401-20250218&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021825\" target=\"_blank\" rel=\"noreferrer noopener\">value<\/a>&nbsp;equity haven\u2019t changed, but the constituents that make up various growth and value indices certainly have. The below chart displays two price ratios. The first compares S&amp;P 500 Growth Index to the S&amp;P 500 Value index (red line). The second compares the S&amp;P 500 Technology sector to the S&amp;P 500 Financials sector (blue line). Historically, the ratios held a very strong positive correlation. For obvious reasons, Financials tend to be more represented in the Value Index and Technology more so in the Growth Index.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"809\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/02\/dA8cx9LU-1100x809.png\" alt=\"\" class=\"wp-image-202279 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/dA8cx9LU-1100x809.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/dA8cx9LU-700x515.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/dA8cx9LU-300x221.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/dA8cx9LU-768x565.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/dA8cx9LU-1536x1130.png 1536w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2025\/02\/dA8cx9LU.png 1794w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/809;\" \/><\/figure>\n\n\n\n<p>Past performance is not indicative of future results<\/p>\n\n\n\n<p>The story here is in the decoupling of the ratios. The rolling 3-year correlation reached negative territory in 2024. The reason is in part due to the growth of the Technology sector. Just 5-years ago in February 2020, the Technology sector represented 8.6% of the S&amp;P 500 Value Index. Today, Technology is the largest weighted sector at 24%, surpassing even Financials (#2 weighted sector, 15.6%). The top 3 weighted companies in this Value index are Apple, Microsoft, and Amazon. Yes, you read that correctly. My point being, is that not every Large-cap Value Index is built the same. Know what you own and why you own it!&nbsp;<\/p>\n\n\n\n<p>&#8212;<br>Originally posted 18th February 2025<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By&nbsp;Shane Murphy, CMT 1\/ Strong Breadth &amp; Equal Weight 2\/ Discretionary vs. Staples 3\/ Growth vs. Value Investopedia is partnering with CMT Association on this newsletter. &nbsp;The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and [&hellip;]<\/p>\n","protected":false},"author":186,"featured_media":202282,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[146,147,8,12,22,148,7],"tags":[1396,333,2292,2293,1927,1330,2645,2646],"contributors-categories":[503],"class_list":{"0":"post-202278","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-macro","8":"category-north-america","9":"category-region","10":"category-securities","11":"category-technical-analysis","12":"category-text-articles","13":"category-traders-insight","14":"tag-aapl","15":"tag-amzn","16":"tag-consumer-discretionary","17":"tag-consumer-staples","18":"tag-msft","19":"tag-sp-500","20":"tag-sp-500-growth-index","21":"tag-sp-500-value-index","22":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- 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