Interesting configuration here. NYSE advance/decline lines corroborated the March 1st high, but the relative strength of SPX versus equally weighted SPX is flashing a warning (Chart 1). The long-term track record of SPXEW/SPX is mixed, but worth noting (Chart 2).
NYSE advance/decline lines are the more traditional measure (Chart 3). And it seems too early for an important top based on the 4-year cycle, which is expected to crest in 2018. But SPXEW/SPX is demonstrating increased selectivity, a decidedly unhealthy condition. Perhaps we’re setting up for at least a minor top. The market’s had a steep run-up, so let’s be cautious here.
Chart 1. SPX versus NYSE A/D lines (composite & common) and SPXEW/SPX
Chart 2. SPEW-X versus SPX with 20-month average
Chart 3. Important tops preceded by narrowing NYSE breadth