Overbought Breadth Levels

Below we highlight the percentage of stocks in the S&P 500 and its ten sectors that are currently trading above their 50-day moving averages. As shown, 77% of stocks in the S&P 500 are currently above their 50-days, the highest level seen since last October. While it's good to see markets doing well again, things have gotten overbought over the last week or so.

Currently, 85% of Financials, 80% of Industrials and 80% of Technology stocks are above their 50-days. The only sectors with a downward trending breadth line are Energy and Materials. After hitting a rough patch in recent days, the percentage of Material stocks above their 50-day moving averages has dropped to 54%.

Comments

[lern2win:]

I agree that a high percentage of stocks are above their 50 DMA, but only 20% of stocks have their 50 DMA greater than the 200 DMA. I think in this environment we can support a higher percentage of stocks above their 50 DMA, just as we support a higher percentage above the 200 DMA in more normal times.

2008 May 02 09:43 AM

[globalmacro:]

im lerning, thanks.

2008 May 02 07:07 PM

[Alphameister:]

Good point, lern2win. The "overbought" conditions can persist for a very long time, especially coming off a major low. Let's see a chart coming off the 2003 lows.

2008 May 03 01:27 PM

[tradersyste...:]

The obvious takeaway from a chart perspective is whenever these sectors hit past highs, its not a bad time to sell - kind of like a market overbought indicator....

2008 May 05 02:11 AM