Small Caps Add Breadth Support, but Confirmation Is Still Incomplete
Market breadth improved into the Friday, May 22 close, helped by stronger weekly participation and better short-term moving-average breadth.
The trend has improved from ‘neutral with a positive bias’ to ‘positive’, but the still-muted SMA200 and 3-month readings prevent a very positive rating.
Index Overview (SPY, QQQ, IWM)
Short Term (Daily)
Long Term (Weekly)
SS SPDR S&P 500 ETF TRUST-US (SPY | ▲0.39%) remains in a strong position. The weekly chart shows price pressing into the upper resistance area while the ChartMill Trend Indicator remains green. On the daily chart, SPY is still above both the EMA9 and EMA21, and the recent pullback was absorbed quickly. Compared with the previous trading day, the pattern is largely unchanged: large-cap momentum remains intact.
INVESCO QQQ TRUST SERIES 1 (QQQ | ▲0.42%) continues to lead. The weekly chart is pushing into new-high territory, and the daily chart remains well supported above the short-term EMAs. There is no meaningful deterioration versus the prior session. The main observation is still the same: technology and growth leadership remain the strongest part of the market structure.
ISHARES RUSSELL 2000 ETF (IWM | ▲0.93%) is the index that adds the most useful information today. Small caps are also testing the upper part of their resistance zone, which makes the rally look broader than it did earlier in May. However, IWM is still moving into overhead supply rather than breaking cleanly above it, so this is an improvement rather than a completed confirmation.
The latest market-news report adds context: the S&P 500 had just completed its eighth consecutive weekly gain, while AI-related strength remained a major driver. At the same time, consumer confidence, bond yields, oil, and Fed expectations remained important macro risks. Since U.S. markets were closed on Monday, May 25 for Memorial Day, the weekend developments should be treated as background for the next trading session, not as direct drivers of Friday’s breadth data.
Breadth Review
The breadth picture improved versus the previous trading day, especially in the weekly data.
Daily breadth stayed constructive, with 57.7% advancers versus 39.0% decliners. That is less strong than Thursday’s 61.6% advancers, but still clearly positive. The more aggressive daily breadth also supported the improvement, with 4.8% of stocks advancing at least 4% versus 2.3% declining at least 4%.
The short-term moving-average data strengthened. The percentage of stocks above the SMA20 rose to 52.4%, back above the 50% threshold after sitting at 49.8% the previous session. The SMA50 reading improved to 59.5%, while SMA100 reached 51.2%. This gives the short- and medium-term internal trend a healthier look.
The longer-term picture is not fully confirmed yet. Only 49.3% of stocks are above their SMA200, which keeps the broad long-term trend close to neutral. The 3-month data also remains slightly negative, with 47.5% advancing versus 51.7% declining. This is the main reason the rating should not move to very positive.
New highs versus new lows remain supportive: 6.7% new highs versus 1.1% new lows. That confirms that leadership is expanding, even though the broader universe is not yet fully aligned.
The strongest improvement came from the weekly advance/decline data. Weekly advancers rose to 66.9%, while weekly decliners fell to 31.9%. That is a clear reversal from the previous session, when weekly decliners still outnumbered advancers. This shift justifies an upgrade from the prior neutral with positive bias rating.
Conclusion
The market breadth trend has improved from neutral with a positive bias to positive.
Current breadth trend rating: 6 — Positive
The upgrade is supported by constructive daily breadth, stronger weekly participation, improving SMA20/SMA50/SMA100 data, and a healthy new-high/new-low spread. The rating stops short of very positive because SMA200 participation is still just below 50% and the 3-month breadth data remains slightly negative.
ChartMill Market Desk
This daily Market Breadth Update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
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