Percentage of Stocks Above 50-Day Moving Average

Below we highlight the percentage of stocks trading above their 50-day moving averages in the S&P 500 and its ten sectors. As shown, 5% of stocks in the S&P 500 are still trading above their 50-days, so we still have further to go before we get to zero. Three sectors -- financials, industrials, and utilities -- have zero stocks trading above their 50-days. Technology has the highest percentage of stocks above their 50-days at just 12%!

Comments

[investor88:]

Useful analysis, shows that there is still great uncertainty ahead.

Mar 07 05:19 AM

[BBorSC:]

Check out the time period between the end of September through November 8th (i.e. the last time the market was hit with a psychological bomb - Lehman's collapse). It shows there is about a one month recovery time from such an event. A collective digestion if you will.

We got hit in February by the realization that the "stimulus" was actually a liberal shift to increase welfare spending (which not only will not provide a recovery but will actually worsen the future outcome). Additionally there was the realization in February that no meaningful action was to be taken on financials other than apply a stress test which has already clearly been applied (by the market).

One could argue that the stabilization plan enacted by the previous administration combined with the "hope" that the new administration would be moderate combined to give us the November thru early January bear rally.

However with (unfortunately) all eyes on government intervention the administration stumbled in the blocks with the new "transparency" revealing that there were no answers worth the paper the stimulus was written on.

Now there are some signs of a recovery despite that blow:

#1 Oil useage and refinery output have been rising for three consecutive weeks (of note - above last year's useage!). This means Americans are driving again and if they are driving then they are spending.

#2 International Trade has come off its bottom. Perhaps temporarily but still a three X rise in the BDI for an extended (one month) time period means that raw materials are being ordered to produce goods.

Admittedly it will take a much longer time period for the first two trends to mean anything more than a blip in the long downward slide but the possibility remains (of a first indicator).

#3 Retail sales (though down vs. last year) were stronger than expected.

Let's face it. We are a long way from any kind of signal of even a bear rally. However for those looking for signs of a local bottom there is some data to support it. The true reading (or kick-start) to the rally will Bank of America's earning announcement come mid April for first quarter. Ken Lewis continues to make noise that BAC will surprise the world. That certain segments (e.g. Countrywide) are providing record earnings. If that happens we will have had our one month recovery from the Obama disappointment and enough time to determine if the trends in driving and spending are real. Look to the spring (bear?) rally.

My own situation is as follows:

60% Cash or Bonds (VBTIX) (Got out right after Lehman - not great but in retrospect getting out with the Dow at 10,000 looks pretty good). I went to 70% cash and bonds at that time and have been nibbling back into the market since mid-February.
40% Equities with 4% in SDS and 2% in PST.

I have lost 24% from the market peak (sadly to say).

Of the equities I am broadly diversified but tend to be heavy in energy (as a first signal of recovery). I like UCO. You can get the same response as OIL with UCO but at much less exposure. I am thinking of buying a substantial block of SSO and will decide this weekend the buy-in level.

Mar 07 07:04 AM

[beachbum1:]

will congress lift mark to market accounting next week to put a floor under financials?

Mar 07 09:08 AM

[squark62:]

a frequency of oscillation is very noticeable. the period of time in the trough seems to be increasing but we're not dealing with a large data set here. definable something to watch. very interesting.

Mar 07 09:28 AM

[dukeow:]

What is Warren Buffett doing? His annual meeting is close at hand.

Mar 07 09:59 AM

[phdinsuntan...:]

Clinton era: tech stocks, telcos, biotech and telcos
Bush era: commodities, financials, aerospace stocks
Obama times: health, CO2 and education stocks
politics drives the markets, always, nice and easy...

Mar 07 10:43 AM

[jrhc:]

Interesting the comment by bborsc but... charging that Obama's plan is just a «liberal» game is unjustified. A lot 's been done with financial' s support and people is suffering and need some meaningful welfare expenditure as well. We expect that a good number of people will soon start going back to work... and the market will follow...

Mar 07 03:35 PM

[abcde_98:]

re the Presidential eras: it's not just the President but the economy and demographics


re Mark-to-Market (MTM): the arguments have already been presented for both sides. Having recently moved to a system of greater transparency, if reporting is returned to high-level info, how can investors make informed judgments and decisions? Also, how can companies be monitored to ensure companies are not fiddling with the books? Finally, what about the international community that has progressed towards fair value/MTM - America would be seen as retracting and weak, and foreign investors could pull out.

Congress being involved is somewhat disappointing. MTM will get media attention, yet only a political decision would remove MTM (and actually cause a lot of adminstrative headaches). Would you rather a system where it appears things are going ok (because mid-level detail not provided), and then wake up one day surprised of losses (from where? how could this be? etc?) and huge drop in equities.

Mar 07 04:59 PM

[User 371716:]

This market is going lower. There could be a bear rally but the real bottom is no higher than 5,000!

SSO is NOT a good buy - and - hold bet in this market. Remember it's daily reset effect.

" I am thinking of buying a substantial block of SSO and will decide this weekend the buy-in level. "

My advise would be "wait!" Even if there's a bear rally this market is not going to recover for months if not years.

Mar 07 05:06 PM

[Afthought:]

Three steps to healthy market returns despite headline financial reporting and finger pointing: Trade, trade, trade.

Mar 07 06:43 PM

[Bruce Pile:]

Those charts seem to show an increasing strength for each successive low submerging more stocks below zero each time. This jives with what you see if you get a take from VectorVest on the current state of the market. One thing VectorVest seems to do well is gauge trend change or strength. If you have their program analyze SH, the short on the S&P 500, you now get an RT of 1.62 on their scale of 0.00 to 2.00. That's unusually strong. But if you have SKF, the double short on the financials, analyzed, the RT comes up as 2.00! I don't think I've ever seen anything peg the RT at the high.

Mar 07 10:22 PM

[Conan the B...:]

Excuse my lack of enthusiasm for the continued use of Mark to Market. MTM only translates into more Government intervention.

The Public Knows that these Toxic assets Exist but they also know that when push comes to shove, if a major company runs afoul, the Government will intervene.

Meanwhile, both the Fed and Treasury have and still are singing the same refrain: the Government can hold these toxic instruments long enough to make a PROFIT.

To me, that translates into the fact that individual companies can Also hold them long enough if MTM is removed. They knew what they had on their books and shoved the junk into Tier 3. They could have kept it on Tier 3 forever if MTM hadn't forced revelation.

Reversion to pre-MTM conditions, will help not hurt.

That's my view and I'm sticking to it.

Mar 08 05:49 AM

[robert.b.fe...:]

The markets need short term help now. Not the excess spending in the porculous either. Eliminating MTM and Sorbanes/Oxley, lowering the corporate top marginal rate to 15% capital gains to 0.05% and eliminating tax on interest completely. Reinstating the uptick rule and the uptick rule would be the rout to take going forward.

Mar 09 09:24 AM