Only 27% of S&P 500 sectors are currently above their 50-day moving average.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel shows the price of the S&P 500 index.
The red line in the top panel shows the 50-day moving average of the S&P 500 index.
The black line in the bottom panel shows the percentage of S&P 500 sectors above their 50-day Average.
The Takeaway: As of yesterday's close, only 27% of S&P 500 sectors are currently trading above their 50-day moving average… In short, this breadth reading needs to improve sooner rather than later, as the S&P 500 typically faces challenges when the majority of sectors are below their 50-day moving averages.
The 10% correction we experienced in late February into early March caused some damage to the intermediate trend. However, over the past seven trading days, we have seen a resurgence of bullish activity, with the S&P 500 index climbing over 4%. While the recent strength from the bulls sets the stage for potential further gains, they must demonstrate additional strength to push the market higher.
The impact on stocks in the near future will depend on how long these breadth readings remain low.
Is this merely a short-term pullback in the context of a larger bull market trend, or will we experience further weakness?
Grant Hawkridge | Chief Aussie Operator, All Star Charts
PSS: If you missed Steve and Alfonso's live event yesterday, catch the replay here. Insiders always come out in periods of volatility. The best ones are master dip-buyers. With this in mind, Steve and Alfonso reviewed some of the top insider buys of the last week and ranked them based on significance. They also shared some thoughts on their favorite long idea from their universe of insider stocks.
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