Market Breadth Study – $MA200SP500 Signal Performance

Market breadth is one of the most overlooked but powerful tools for understanding the health of the S&P 500. One of the most reliable indicators I track is $MA200SP500, which measures the percentage of S&P 500 stocks trading above their 200-day moving average.

Extreme readings are rare — and when they occur, they often signal capitulation, forced selling, and deeply oversold internal conditions that historically precede major market rebounds

To test this, I pulled every weekly instance since 2020 when:

$MA200SP500 ≤ 0.25
(meaning 25% or fewer S&P 500 stocks are above their 200-day average)

These moments represent true “washout” conditions, and historically, they’ve marked some of the best medium-term buying opportunities in the past five years.

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What the $MA200SP500 Indicator Tells Us About the S&P 500

The indicator triggered a signal whenever:

$MA200SP500 ≤ 0.25

(meaning 25% or fewer S&P 500 stocks were above their 200-day moving average)

These events represent true washout conditions.

Below are every signal since 2020 — and how SPY performed afterward.

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📌 The Signals: Every Time Breadth Hit ≤ 0.25

Date	$MA200SP500	SPY Price	3-Month Return	6-Month Return	12-Month Return
23 Oct 2023	0.248	$410.74	+18.5%	+24.0%	+35.4%
17 Oct 2022	0.232	$374.25	+4.0%	+18.9%	+17.9%
10 Oct 2022	0.154	$357.77	+9.9%	+31.5%	+25.9%
03 Oct 2022	0.170	$362.75	+7.0%	+29.7%	+20.6%
26 Sep 2022	0.116	$357.17	+8.8%	+31.4%	+24.2%
19 Sep 2022	0.140	$368.11	+6.7%	+25.1%	+21.0%
18 Jul 2022	0.196	$395.07	-2.9%	+14.8%	+6.3%
11 Jul 2022	0.174	$384.96	+2.2%	+22.1%	+15.8%
20 Jun 2022	0.216	$389.94	-6.1%	+4.8%	+3.9%
16 May 2022	0.248	$389.73	+5.5%	+18.0%	+9.2%
31 Mar 2025	0.208	$505.54	+23.6%	—	—
23 Mar 2020	0.076	$254.00	+45.6%	+31.1%	+47.1%
16 Mar 2020	0.034	$229.40	+55.3%	+34.5%	+58.9%

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📊 Performance Summary

Short-Term: 3 Months

• Median Return: +8.8%
• Positive Outcomes: 91% (10 out of 11)

Even in volatile bear markets, forward 3-month returns were overwhelmingly positive. The only weak readings occurred during mid-2022 when the Fed was deep in tightening mode.

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Medium-Term: 6 Months

• Median Return: +25.1%
• Positive Outcomes: 100% (10 out of 10 signals)

This is where the signal shines.
Every single instance produced solid medium-term gains — often explosive, as seen in:

• Mar 2020: +31.1%
• Oct 2022 cluster: +25–31%
• Oct 2023: +24.0%

This showcases how deeply washed-out breadth conditions precede sustained recoveries.

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Long-Term: 12 Months

• Median Return: +21.0%
• Positive Outcomes: 100% (10/10 signals)

Not one instance produced a negative 12-month return.

The combination of forced selling + capitulation + breadth reset sets the stage for durable rallies.

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🔥 Key Insight

When fewer than 25% of S&P 500 stocks are above their 200-day MA on a weekly close, the market is not just “oversold” — it’s historically near exhaustion, often marking the end of broad downside momentum.

The signal captures periods where:

• Institutional selling is nearly complete
• Correlations spike
• Retail capitulates
• Hedge funds de-gross
• Breadth thrust potential becomes high

Essentially:
When everything is breaking, the market is quietly building energy for the next uptrend.

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📍 The Most Recent Signal: March 31, 2025

• $MA200SP500 = 0.208
• SPY = $505.54
• 3-month return = +23.6%

Historical context says:
This rally is not unusual — it’s exactly what the model predicted.

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📈 Conclusion: A High-Conviction Breadth Signal

Across all signals since 2020:

• 91% positive after 3 months
• 100% positive after 6 months
• 100% positive after 12 months
• Median 6-month return: +25%
• Median 12-month return: +21%

This is one of the strongest probability edges in modern market breadth analysis.

If history rhymes, the March 2025 signal could still have room to run.

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How to invest when market reaches these signals? Read our take on long-term investing

Learn how we add market breadth using TrendSpider Charts