Below is a chart showing the historical percentage of stocks in the S&P 500 trading above their 50-day moving averages. Ā 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. Ā 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. Ā During market rallies, you want to see the strongest breadth levels in the cyclical sectors. Ā 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. Ā During the most recent market rally, however, the cyclicals have bounced back. Ā 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. Ā Sectors like Industrials, Financials and Consumer Discretionary also have healthy readings now that are not too extended to the upside. Ā 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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