Market Breadth Shows Vast Improvement
Along with looking at the technicals of simple price charts, we analyze the underlying breadth of indices and sectors by looking at the percentage of stocks above their 50-day moving averages. Below we highlight these percentages for the S&P 500 and its ten sectors.
As shown, with the recent break of the S&P 500's downtrend line, the percentage of stocks above their 50-days in the index has also broken out of the range that has been in place since late 2007. This indicates that the rally has been accompanied by underlying strength. At 57%, it also indicates that the rally could have further to go, since overbought levels aren't reached until the number hits the 80% mark.
On a sector basis, both Consumer sectors, Materials, Industrials and Technology have the highest percentage of stocks above their 50-day moving averages, while Health Care, Utilities, Telecom and Energy have the least. Financials are right about inline with the index as a whole.
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This article has 1 comment:
This latest head fake "rally" has no volume. Only the public is buying into this edea of a stock market bottom. The public is easily swayed by the stock brokers on CNBC who are trying to jack up prices so they can make more commissions. I think you are doing a serious disservice to the folks who are reading your column, is it possible that you guys are long this market?