We saw stage one of the breadth cycle... I’m now on the lookout for stage two.
Here’s the chart:
The Takeaway: First, I want to give a huge shoutout to Mike Hurley, who taught me this way to look at the stock market!
We recently saw stage one of the breadth cycle.
In my framework, that means Spring is here.
On May 12th, over 55% of S&P 500 stocks made 20-day highs. That’s a breadth thrust — the kind of signal we only see at major turning points. It marks the beginning of a new leg higher, not just for a handful of stocks, but across the board.
But first, a quick recap on how we define the breadth cycle.
I break the market into four seasons:
Spring: The reset. It starts with a breadth thrust — shown as a green line in our chart.
Summer: The uptrend and momentum strengthen. Breadth and leadership move together.
Fall: A warning sign. An unusual spike in the 52-week lows marks the “first fall day” — the red line.
Winter: Selling hits hard. We wait for a selling climax and a base to form.
That last part — the selling — just played out with the S&P 500 nearly falling 20%. However, we’re now seeing the opposite: buyers stepping in across many names.
The key now is further participation. Not just the big stocks leading — it needs to be broad.
Yes, there will be bumps. That’s normal. But this shift matters.
It tells us the market has moved from defense to offense.
Historically, when this type of signal fires, the next year or two tend to be strong.
Of course, we will see pullbacks and huge divergences develop along the way, which confuses most people who don’t normally watch breadth. But I do.
That’s just the rhythm of the cycle.
So I’ll keep tracking the signals. They’ll let us know if anything changes. For now, it’s Spring. And I'm on the lookout for Summer…
Do you use breadth when you are analyzing the stock market?
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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