In a B.I.G. Tips report released last week to Bespoke Premium subscribers, we noted that 93% of stocks in the S&P 500 were trading above their 50-day moving averages. When this reading gets above 90%, there's not much room on the upside in the near term. After a few days of downward and sideways trading following the 93% reading, the percentage of stocks now above their 50-days in the S&P is already down to 78%. A similar fall happened following the March and April rally, and the indicator initially held above 70% but then rolled over and got all the way down to 25% by early July. Hopefully a similar scenario is not in order now, but as we all know, September can be a cruel month for the market.
Looking at sectors, Energy and Telecom currently have the weakest readings, while Technology and Consumer Discretionary are the only two still above 80%.
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