By Kristoff De Turck - reviewed by Aldwin Keppens
Last update: Jun 2, 2025
(All data & visualisations by ChartMill.com)
Initially it looked like the major US index ETFs would close significantly lower on Friday. Eventually, financial markets were partially reassured by a message from President Trump about an upcoming meeting with Chinese President Xi Jinping.
The indices remain close to their next resistance.
The final trading week of May 2025 ended with a noticeable decline in market breadth, reflecting broad-based weakness despite strong index-level performance earlier in the month.
On May 30, only 41.9% of stocks advanced, while 55.7% declined.
This imbalance was more negative than the previous session (May 29) when advancers stood at a strong 65.9%. The shift highlights a loss of momentum heading into the new month, with selling pressure returning to the broader market.
The number of stocks gaining or losing more than 4% stayed modest. On May 30:
2.3% of stocks rose more than 4% (similar to previous days),
But 3.3% fell more than 4%, the highest daily downside volatility since May 21.
This indicates an uptick in high-magnitude declines, suggesting that sellers are becoming more aggressive.
The chart above illustrates a key trend: fewer stocks are trading above their short- and long-term moving averages.
The percentage of stocks above the 20-day SMA dropped to 59.6% from a high of 77.8% earlier in the month.
The 50-day SMA readings remained relatively stable around 68%, but failed to improve further.
The 100-day and 200-day SMA levels continue to show weaker participation, with only 48.8% and 39.2% of stocks above these thresholds, respectively.
This decline is a cautionary signal, showing that fewer stocks are supporting the uptrend seen in the major indices.
Over a 3-month view, advancing stocks (37.0%) still outnumber decliners (61.3%), but the gap is narrowing. Additionally, only 7.1% of stocks are up 25% or more over the past three months, while 9.4% are down at least 25%.
This distribution suggests waning bullish leadership and a slow creep in deeper losses.
While headline indices may show only minor daily fluctuations, the underlying breadth data paints a more fragile picture.
Declining participation, reduced breakout activity, and weakening support from long-term moving averages all hint at potential market exhaustion, or at the very least, a short-term pause in upward momentum.
Traders should be cautious about overly bullish positioning, particularly if the technical support from broader breadth metrics continues to deteriorate.
Next to read: Market Monitor News, June 02
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The indices continue to quote close to their next resistance. While headline indices may show only minor daily fluctuations, the underlying breadth data paints a more fragile picture.
The data from May 29, 2025, confirms that market breadth has rebounded significantly, with strong participation and improving technical metrics across shorter moving averages.
The breadth indicators signal a fragile and reactive market environment, prone to sharp swings and lacking sustained leadership. Bullish momentum may struggle to gain lasting traction.
The May 27 surge in breadth confirms the bullish price action observed across major indices on that day, reinforcing the move’s credibility.
The latest data show a market that is weakening internally, with fewer stocks supporting any upside and an increasing tilt toward broad-based selling.
The market is in a cautious phase with waning momentum.
The broad-based selling on May 21 wasn't a surprise, it was preceded by several days of narrowing breadth.
While the major indices are holding up, breadth is beginning to diverge and fewer stocks are driving the rally, market participation is waning.
Markets continued to show resilience at the start of the week, with all major indices maintaining their short-term bullish trends.
The short-term trend remains bullish across all major indices, supported by strong market breadth and price action.
Short-term market trends remain bullish as strong breadth and rising moving average participation support the ongoing rally across U.S. indices.
While some longer-term measures still reflect strength, the short-term internal weakness suggests the market could be due for further consolidation or a deeper pullback, unless leadership broadens again.