The S&P 500 index managed to log one of its strongest weeks in 2025. Short-term breadth conditions have improved, and the crucial 5500 level has now been broken to the upside. Are we in the later stages of a countertrend rally, or just in the early innings of a broader recovery for stocks?

Let’s review three key charts together and evaluate the evidence.

Trendline Break Suggests Further Short-Term Strength

My daily chart of the S&P 500 has featured a thick pink trendline since March, when a lower peak around 5800 provided a perfect opportunity to define the downtrend phase. With the quick reversal off the early April low around 4850, the SPX has finally broken back above this trendline.

To be clear, after a breakout of this magnitude, I’m always looking for confirmation from the following day. Will additional buyers come in to push this chart even further to the upside? Assuming that’s the case, then I’m immediately drawn to a confluence of resistance in the 5750-5850 range. The 200-day moving average is currently sitting right around the late March peak, and both of those levels line up well with a price gap back in November 2024.

If the S&P 500 can finally break above that resistance range, I would expect much further upside for risk assets.

Breadth Conditions Confirm Short-Term Market Strength

One of the biggest improvements I’ve seen coming out of the early April low is the upgrade in short-term breadth conditions. The McClellan Oscillator has broken back above the zero level, most days this week saw more advancers than decliners, and the Bullish Percent Index has definitely improved.

In the bottom panel, we can see that the S&P 500 Bullish Percent Index has risen from a low just above 10% at the April low to finish this week at 64%. That confirms that over half of the S&P 500 members generated a point & figure buy signal in the month of April!

But the middle panel shows the real challenge here, in that long-term measures of breadth are still clearly in the bearish range. Just 35% of the S&P 500 stocks are above their 200-day moving average, similar to the S&P 500 and Nasdaq 100. It’s only if this indicator can push above the 50% level that the S&P 500 could stand a real chance of sustainable gains above 5750.

The Stoplight Technique Lays Out a Clear Playbook

I love to overlay a “stoplight” visualization on a chart like this, helping me clarify how I’ll think about risk depending on where the S&P 500 sits at any given point.

I would argue that a confirmed break above resistance at 5500 brings the S&P 500 chart into the “neutral” bucket. In this way, we’re respecting the fact that a rally from 4850 to 5500 is a fairly impressive feat, but also acknowledging that the SPX remains below its most important long-term trend barometer, the 200-day moving average.

If we see further gains in the weeks to come, the SPX may indeed push into the bullish range, which for me would mean a push above 5750-5800. In that scenario, the S&P 500 would be clear of its 200-day moving average, and I would feel much more comfortable adding risk to the portfolio. Until and unless we see that upside follow-through, though, I’ll remain comfortably defensive.

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

After weeks of uncertainty, the stock market finally gave us something to smile about. The major indexes just wrapped up four straight days of gains, and optimism is starting to creep back in. Could this be the shift we’ve been waiting for?

Let’s break it down.

The big concerns this week were all about tariffs and the potential removal of Fed Chairman Jerome Powell. But markets breathed a sigh of relief when it looked like tensions might ease between the two largest global economies. Plus, Powell staying put at the Fed helped calm some nerves.

In short, the fear factor took a breather, and the bulls took charge.

What Are the Charts Telling Us?

The S&P 500 ($SPX) crossed above the key 5500 level. This isn’t just any number; it’s a major line in the sand. It represents the March low and, if you go further back on the daily chart below, it has been a support and resistance level for previous price action. The purple horizontal line marks the 5,500 level.

FIGURE 1. SIGNS OF A TURNAROUND? The S&P 500 closed above the key 5,500 level, a major breakthrough. Breadth indicators are suggesting expanding bullish participation. Chart source: StockCharts.com. For educational purposes.

Even better, market breadth is improving.

• The Bullish Percent Index (BPI) for the S&P 500 is at 65% — a solidly bullish reading.
• The Advance-Decline Line is trending higher.
• The percentage of S&P 500 stocks trading above their 200-day moving average is beginning to display increasing bullish participation.

We are also seeing strength across the board:

• BPI readings for the Nasdaq 100, S&P 100, S&P 500, and Dow Industrials are all above 50%.
• 10 of the 11 S&P 500 sectors have BPIs above 50%, with Consumer Staples being the only one with a BPI below 50. This is surprising since it was one of the only sectors above 50% not long ago.

Sector Watch: Who’s Leading?

If you’re looking for clues about the market’s next big move, watch sector rotation. Right now, leadership is coming from:

• Technology
• Consumer Discretionary
• Communication Services

These are your classic “risk-on” sectors—if they’re leading, that’s typically a bullish sign.

What About Bonds, Gold, and the Dollar?

Some of the big-picture trends are starting to stabilize, too:

• Bond yields are dipping, which is helping bond prices recover.
• Gold pulled back after hitting new highs.
• The U.S. dollar is showing signs of strength again.
• And the $VIX—Wall Street’s fear gauge—is finally back below 30.

All small signs, but they add up.

Indicator of the Week: The Zweig Breadth Thrust

One indicator all technical analysts should take note of is the Zweig Breadth Thrust indicator.  It’s a rare signal that flashes when market breadth shifts quickly from bearish to bullish.

The indicator is the 10-day exponential moving average (EMA) of net NYSE advances. The NYSE Breadth Thrust signal fires when the indicator moves from below 0.40 to above 0.615 in 10 days.

The weekly chart below shows that this is the third time the Zweig Breadth Thrust signal was fired in the last five years. The last two times this occurred were in 2023, when the NYSE recovered after dipping below its 40- and 150-week simple moving average (SMA). This time, the index bounced off its 150-week SMA.

FIGURE 2. ZWEIG BREADTH THRUST FIRES A REVERSAL SIGNAL. Previous signals have been followed by bullish moves in the NYSE. Will we see a similar scenario this time? Chart source: StockCharts.com. For educational purposes.The Zweig Breadth Thrust is a bullish reversal signal. Note that each time the signal was fired, the market moved higher. It doesn’t guarantee a bull run, but it’s a green flag.

What’s Coming Next Week?

If this weren’t a headline-driven market, I would be more confident about the possibility of the market moving higher. Next week is packed with potential market-moving headlines.

• Big Tech earnings
• Q1 GDP
• PCE Inflation data (the Fed’s favorite inflation gauge)
• ISM Manufacturing
• Non-Farm Payrolls

At the Close

The underlying market conditions are improving and some key signals are flashing green. But, as noted, it’s still a headline-driven market, and that means all the more reason to stay alert. Focus on leading sectors, watch for confirmation in breadth, and keep your investment plan tight.

End-of-Week Wrap-Up

• S&P 500 up 4.59% on the week, at 5525.21, Dow Jones Industrial Average up 2.48% on the week at 40,113.50; Nasdaq Composite up 6.73% on the week at 17,382.94.
• $VIX down 16.22% on the week, closing at 24.84.
• Best performing sector for the week: Technology
• Worst performing sector for the week: Consumer Staples
• Top 5 Large Cap SCTR stocks: Palantir Technologies, Inc. (PLTR); Rocket Lab USA, Inc. (RKLB); Robinhood Markets, Inc. (HOOD); Rubrik, Inc. (RBRK); MicroStrategy, Inc. (MSTR)

On the Radar Next Week

• Earnings season continues with Meta (META), Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), and others reporting
• March JOLTs Job Openings
• Q1 GDP Growth Rate
• March PCE
• April ISM Manufacturing
• April Non-Farm Payrolls

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your personal and financial situation, or without consulting a financial professional.

In this video, after last week’s sharp market rally, Mary Ellen breaks down where the markets stand now, which leading sectors are showing the most strength, and how to recognize if your stocks are entering a new uptrend. Get expert insights on market leadership, sector rotation, and key signals to watch as momentum builds in specific areas of the market. This is a must-watch for investors looking to stay on top of current stock trends and spot early breakout opportunities.

This video originally premiered April 25, 2025. You can watch it on our dedicated page for Mary Ellen’s videos.

New videos from Mary Ellen premiere weekly on Fridays. You can view all previously recorded episodes at this link.

If you’re looking for stocks to invest in, be sure to check out the MEM Edge Report! This report gives you detailed information on the top sectors, industries and stocks so you can make informed investment decisions.

Following a strong move the week before, the markets took on a more consolidatory look over the past five sessions. Following ranged moves, the Nifty closed the week on just a modestly positive note. From a technical standpoint, the Nifty tested a few important levels on both daily and weekly charts. However, the trading range narrowed. The Index oscillated in a 517.60-point range over the past week. The volatility surged again; the India VIX spiked 10.93% to 17.16. The headline index went on to close with a modest weekly gain of 187.70 points (+0.79%).

The coming week is shortened, with Thursday being a trading holiday due to Maharashtra Day. We could write about more than one thing that the markets could be worried about over the coming days. It could be the lowered growth forecasts by the IMF that include India and other economies; it could also be the heightened possibility of escalating geopolitical tensions between India and Pakistan. However, all that said, the markets are also at a crucial technical juncture. The Nifty has closed just at the 200-DMA placed at 24050. Besides this, Index has also defended the 50-week MA at 23925. This makes the 23,900-24,050 zone a crucial support area for the Nifty. The consolidation is imminent as the Nifty has rebounded over 11% from its April 07 lows, and minor corrective retracements cannot be ruled out. However, if 23900 is breached, the markets may see some extended retracements.

The weekly RSI is at 55.46; it stays neutral and does not show any divergence against the price. The weekly MACD is bullish and stays above its signal line. A candle resembling a Shooting Star has emerged, increasing the likelihood of consolidation. Importantly, any candle formation should not be traded in isolation and must be used in conjunction with the overall technical setup.

The pattern analysis shows that the Nifty has defended the 50-week MA placed at 23925. The Index has also tested a rising trendline resistance; it violated this trendline support on its way down, and now this is expected to act as resistance. Overall, the zone of 24050-23900 is a crucial support zone for Nifty. If the level of 23900 is violated, it can lead to incremental weakness.

Overall, the technical structure of the market suggests that it is time for one to focus more on protecting gains at higher levels. While there could be some reactions by the markets due to external factors, the underlying buoyancy stays intact. The only thing to be cautious about is the natural corrective retracements that the market may experience following the steep upward move that has taken place. Investors must keep fresh purchases should be kept in low-beta stocks that have strong relative strength. With sector rotation visible, a cautious outlook is advised for the day.

Sector Analysis for the coming week

In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.

Relative Rotation Graphs (RRG) show the Nifty PSU Bank Index has rolled inside the leading quadrant. The Consumption, Commodities, Financial Services, Infrastructure, Metal, and Nifty Bank Indices are also inside the leading quadrant. While the weakening of Relative Momentum is seen in the Metal and Financial Services Index, they are likely to outperform the broader markets relatively.

The Nifty Services Sector Index has rolled inside the weakening quadrant.

The Midcap 100 and the Realty Index are showing strong improvement in their Relative Momentum while staying inside the lagging quadrant. The IT and the Auto Index continue to languish inside the lagging quadrant.

The Media Index has rolled inside the Improving quadrant, indicating a likely beginning of its phase of relative outperformance. The Nifty PSE, Energy, and FMCG Indices are also inside the improving quadrant.

Important Note: RRG charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

The Zweig Breadth Thrust for the S&P 1500 triggered on Thursday as stocks surged last week. In poker terms, this thrust signals an abrupt participation shift as stocks move from folding to all-in within ten days. A bullish thrust signal is only part of the puzzle. How do we know when this signal fails? Today’s report will look at the ZBT signal in the S&P 1500 and offer an exit strategy. Stick around to the end for an offer to access a fully quantified strategy based on the Zweig Breadth Thrust.

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TrendInvestorPro subscribers have access to three timely reports. The first report/video explains the mechanics of the original NYSE-based Zweig Breadth Thrust indicator and then shows a modern version using S&P 1500 Advance-Decline Percent. Second, we also presented a trading strategy using ZBT signals for entry and another indicator for exits. The third report/video covers the setups and thrust signals for the percent above SMA indicators. Some of these indicators also triggered this week, but not all. Click here to take a trial and get full access.

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ZBT Triggers for S&P 1500, but Not S&P 500

The first chart shows the Zweig Breadth Thrust (ZBT) indicator triggering bullish as it moved from below -20% to above +23% within ten trading days (blue line). This thrust signal means S&P 1500 advance-decline breadth became oversold with strong selling pressure and then recovered in dramatic fashion with a surge in upside participation. Moreover, this shift occurred within a 10 day window. This reversal of fortune was both sudden and sharp.

Note that the Zweig Breadth Thrust triggered an epic signal in November 2023, and we were on it. See this report (11-November-2023) for details on the original NYSE-based Zweig Breadth Thrust. See this report (18-November-2023) for details on using S&P 1500 Advance-Decline Percent to create a Zweig Breadth Thrust indicator.  

S&P 500 ZBT Falls Short

The ZBT indicator for the S&P 500 did not trigger. The indicator was below -20% on April 8th and did not make it back above +23% within the 10 day window. In fact, the indicator did not make it back above +23% this week. This shows less upside participation within the S&P 500, and more upside participation within the S&P 1500. Small and mid cap breadth outperformed large-cap breadth this week.

Where’s the Exit?

The Zweig Breadth Thrust is only used for bullish signals, which means chartists must find another indicator to signal a failed thrust. As its name implies, a thrust is a strong upward move that is powerful enough to foreshadow an extended advance. The Zweig Breadth Thrust in November 2023 provides a classic example as SPY continued higher, never looking back. The blue line shows when both the S&P 1500 and S&P 500 ZBT indicators triggered in early November.

Chartists looking for an exit strategy can consider prior support levels based on reaction lows (troughs). The horizontal blue lines show these support levels, starting with the late October 2023 low. SPY forged a reaction low in January 2025, hit a new high in February and then broke support to trigger an exit. Current support levels are based on the April lows.

Chartists looking for a more dynamic approach can consider a trend-following indicator, which we will explore next (subscribers). This strategy is fully disclosed and quantified with backtest results. Click here to take a trial and get immediate access! 

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