Below is a chart showing the historical percentage of stocks in the S&P 500 trading above their 50-day moving averages. As of yesterday's close, 78% of the stocks in the index were trading above their 50-days, which is a healthy reading but not quite up to the highs it saw earlier this year and in Q4 of last year. When this reading gets up to the high 80s, it usually means the market is due for at least a near-term pause, so we'll be keeping an eye on it over the next few days.
The charts below show the percentage of stocks above their 50-days by S&P 500 sector. During market rallies, you want to see the strongest breadth levels in the cyclical sectors. In March and April, the S&P 500 was trading sideways and holding up well, but it was holding up well because defensive areas of the market like Utilities had strong breadth levels. During the most recent market rally, however, the cyclicals have bounced back. Technology and Health Care had the worst breadth levels back in April, but as of yesterday, 71% of Tech stocks and 85% of Health Care stocks were back above their 50-days. Sectors like Industrials, Financials and Consumer Discretionary also have healthy readings now that are not too extended to the upside. One sector that is pretty extended is Energy, with 91% of its stocks above their 50-days.
As mentioned above, Utilities had the strongest breadth readings back in March and April, but it currently has the lowest reading of any sector at 57% -- not a bad reading, but investors are no longer rushing into it as a defensive/yield play like they were a couple months ago.
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