Tuesday’s session was a mild “pause” day: SPY and QQQ slipped a fraction and breadth turned slightly negative on a day-to-day basis. But participation under the surface remains clearly constructive, with a strong majority of stocks still trading above key moving averages and new highs continuing to outnumber new lows by a wide margin.
Index overview (SPY, QQQ, IWM)
Short Term (Daily)
Long Term (Weekly)
SPY
Daily: A mild pullback/consolidation near the upper end of the recent range. Price is still above the EMA21, but below the EMA9, which is typical of a market that’s pausing rather than breaking down.
Weekly: Trend remains constructive (price well above the longer-term trend reference), but the latest candle shows some near-term supply close to resistance.
Takeaway: SPY looks like a controlled consolidation at elevated levels, healthy as long as pullbacks stay shallow and breadth doesn’t deteriorate.
QQQ
Daily: Clearer “cooling off” behavior than SPY. The close is below both EMA9 and EMA21, reflecting short-term weakness/rotation out of tech leadership.
Weekly: Still in a broader uptrend, but stretched into resistance and now showing hesitation.
Takeaway: QQQ is the soft spot right now. This matters because it often leads on the way up—but today’s breadth suggests weakness is more rotation-driven than broad risk-off.
IWM
Daily: The standout. Price is above EMA9 and EMA21 and pressing into/through prior highs—classic “leadership attempt” behavior.
Weekly: The longer-term picture remains supportive, aligning with the idea that participation is broadening beyond mega-caps.
Takeaway: Small caps are carrying the baton today, which typically helps breadth metrics even when SPY/QQQ are pausing.
Breadth dashboard (most recent day: Wed Jan 14)
The day-to-day tape improved vs the prior session
Compared with Jan 13, the market flipped back to a healthier daily structure:
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Advancing issues: 60.3% (up from 45.7%)
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Declining issues: 36.8% (down from 51.6%)
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Big movers: 5.0% advanced >4% vs 2.7% declined >4%
What changed from yesterday?
Yesterday’s session leaned defensive (decliners led). Today reversed that quickly, suggesting the prior day’s weakness was more of a pause/profit-taking pocket than the start of broader distribution.
Participation remains strong (and is still improving)
The “how many stocks are actually in uptrends?” picture stayed bullish:
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Above SMA(20): 71.6% (up from 70.1%)
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Above SMA(50): 69.7% (up from 67.2%)
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Above SMA(100): 59.0% (up from 57.3%)
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Above SMA(200): 63.0% (up from 61.7%)
This is important context for the index divergence: even with QQQ slipping short-term, the average stock continues to hold up well.
New highs still dominate, but momentum cooled slightly
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New highs (NH): 8.2% (down from 10.5%)
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New lows (NL): 1.3% (unchanged)
So: fewer “fresh breakouts” than yesterday, but still a very constructive NH/NL backdrop. The lack of expansion in new lows is the key stabilizer here.
Multi-day breadth confirms the rally remains broad
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Weekly: 68.9% advancing vs 30.1% declining (improved from 64.1 / 34.7)
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Monthly: 68.5% advancing vs 31.1% declining (improved from 63.6 / 35.8)
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3-month: 58.2% advancing vs 40.8% declining (slightly better than 57.5 / 41.7)
Interpretation: short- and intermediate-term breadth are clearly positive; the 3-month picture is improving but still not “all-clear,” which fits a market that’s advancing but still rotating heavily under the surface.
Putting it together (what the data is saying)
Breadth is strong and getting stronger, especially in participation metrics (stocks above key SMAs) and week/month advance/decline balance.
Leadership is rotating: QQQ is consolidating while IWM is acting like the risk-on proxy today.
The NH/NL structure is supportive, even though new highs pulled back from yesterday’s hotter reading.
Overall, this looks less like “market rolling over” and more like a healthy digestion in mega-caps while the broader list keeps moving.
Breadth trend rating (1–7)
6 — Positive
Even with breadth metrics staying firmly constructive, headline index action was less impressive: both SPY and QQQ finished lower and slipped back below their EMA9, signaling short-term hesitation and profit-taking near resistance.
That said, neither index showed decisive trend damage (they remain in structurally strong uptrends and SPY is still holding above its EMA21), and - more importantly - the participation data improved sharply (advancers regained control and the % of stocks above key moving averages continued to rise).
In other words, today looked more like a controlled pullback in the leaders than a broad-based risk-off move, consistent with keeping the Breadth Trend Rating at 6 (Positive), while recognizing that near-term price momentum in SPY/QQQ cooled.
Kristoff
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