Percentage of Stocks Above 50-Day Moving Averages

From our weekly Sector Snapshot report at Bespoke Premium, below we highlight the percentage of stocks above their 50-day moving averages in the S&P 500 and its ten sectors. As shown, 77% of the stocks in the S&P 500 remain above their 50-days, which is still a high breadth reading compared to levels over the past year. The ability for this indicator to remain above 50% will be a good measure of the sustainability of the current rally.

The Energy sector has the highest percentage of stocks above their 50-days at 97%. The next best sector is Materials at 86%, followed by Health Care at 85%. Telecom (56%) and Consumer Discretionary (59%) currently have the weakest breadth readings.

Comments

[RiskReturnO...:]

Very interesting.

Notice the inverse relationship lately in the XLE and XLY. This continues to be a good pair trade to provide a good risk-reward optimized position. XLE is getting stronger (highest breadth 97%), while XLY has rolled over (to 59%). Some could argue XLE is overbought at these levels, so any pullback in oil (gas) will support the next leg up in Consumer Discretionary names.

A harder to notice pattern in Technology and Health Care. This sector pair allows conservative investors to play some offense (QQQQ) and defense (XLV) as the market sorts out which direction to go. Balance sheets are solid in these companies, and we can let the market decide if it's ready to start a bull market (Tech will be good early cyclical), or if the bear market continues and we bounce along for a while (Health Care will be good defensive play).

May 29 03:03 PM