S&P 500 Back above 50-Day Moving Average

The S&P 500 is trading back above its 50-day moving average for the first time in a couple of weeks. If the index can hold above its 50-day into the close, it will definitely be interpreted as a positive for the market by technicians. And while the index is barely trading above its 50-day, the number of stocks in the index trading above their 50-days is at 61%. This indicates that the underlying breadth of the S&P 500 is a little stronger than the actual price of index itself.

click to enlarge

Below we highlight the stocks in the S&P 500 (>$5/share) currently trading the furthest above their 50-day moving averages. As shown, Morgan Stanley (MS) leads the way at 42%, followed by TSO and SVU at 41%. Other notables on the list include HIG, UNH, VLO and BBY.

Comments

[JohnAl:]

This particular silver lining is a bit weak since the 50 day MA is still a downward trend line.

Jan 28 03:06 PM

[Archman Inv...:]

S & P 500 25 year continuation trend line puts the S & P @ 750 as of today. Ofcourse it can be above that, near it, or slightly below it.

It always reverts to the mean however.

Everyone can get excited about stocks, and with the help of the financial media, their partners in crime the mutual fund managers, by golly we can walk this baby up to 1200 again on the S & P.

Just remember, everything reverts to the mean over time. The farther away we move from 750, the farther we have to fall back to that level.

It sure would be nice if the S & P was at 750 and from there, just went up 10% a year (dividends included) for the foreseeable future.

Instead of what could be up 30%, down 12%, up 15%, down 5%, up 8%, down 45%, etc. But alas, thanks to the Fed and its "partner" trading desks at all the major banks and investment houses, we can expect the market to benefit Wall Street while mom and pop keep losing their shirts trying to figure out when to "get in".

Jan 28 04:45 PM

[David White:]

I agree with the comments. The S&P500 is still in a confirmed downtrend. The Fed confirmed today that conditions have worsened since their December meeting. They said there was a stronger possiblity that there would be no 2H recovery this year.

The Davos economic summit has been saying similar things (a definite negative trend). Dr. Roubini claims we still need to write off about $3.5T. It seems likely this means the stock market is going to fall.

The IMF today revised their prediction for world economic growth this year down to 0.5%. It had been 3% in October, and they predicted 2.2% as late as November. The trend is clearly downward. The stock market isn't likely to go in a reverse direction. The US economy is predicted to contract 1.6% in 2009, and it is predicted to grow 1.6% in 2010. Keep in mind that the trend is still downward so far. Even going by these predictions, you might think there would be little growth in 2H 2009. If 2010 is only supposed to grow 1.6%, one might think it would grow faster in the 2H of 2010. If we guessed 2.5% in 2H of 2010. That might mean .7% in 1H 2010. That would likely translate to little or no growth in 2H 2009 for the US.

If the downtrend for the S&P500 is still in place, that means the MA will likely begin to move lower tomorrow or the next day to get back below the 50-day MA (as it has done through out the downtrend). It looks to me like the good news is probably temporary. It would be nice to be able to say otherwise.

Jan 28 10:52 PM

[User 31036:]

Gentlemen, most day traders look for stocks with a high daily ATR and it would be great if you would be able to separately indicate the liquid stocks with daily ATR's of at least 1.00 and up..I think if you do that it will be very well accepted and appreciated..

Thanks

Mar 18 12:03 AM