As of the close yesterday, 85% of stocks in the S&P 500 were trading above their 50-day moving averages. As shown in the chart below, 85% is high but it's not quite as high as the levels we saw in April and May. Consumer Discretionary has had a huge reversal from one of the weakest sectors to having 94% of its stocks above their 50-days. Financials are only at 72%, which is still well below the highs it saw in April and May. And Energy has gotten a nice bounce from 0% to 83% in a couple of weeks. We've seen quite a turnaround in just 10 trading days, and these charts highlight the turnaround well.
Also the trend is for stocks to stay above their averages for some time before falling below, so just because we are somewhat overbought does not mean we will well off. Let the bull market continue! (Until it doesn't).
Posted by: Sia | July 24, 2009 at 11:52 AM