After a successful test of its 50-day moving average last week, the S&P 500 is once again testing that level today as the major indices are all down more than 3%. Last week we noted to Bespoke Premium clients that the percentage of stocks above their 50-day moving averages as well as other indicators we track "were reaching extreme overbought levels, which is a sign that the market rally is probably set to at least stall out for a couple of days." With the selloff of the last two days, the percentage of stocks above their 50-day moving averages has now gone from over 70% to below 50% (49.2%), which is a step in the right direction in terms of alleviating the overbought levels we hit last week.
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