Stocks Above the 50 Day
As of {yesterday}, the S&P 500 was back above 1,400 and one good day away from taking out its bull market highs. So how does underlying breadth look? As shown below, 79% of the stocks in the S&P are currently above their 50-day moving averages. This is the highest reading seen since mid-March, but it's not quite at the levels seen in January or late last year. This 79% reading is indicative of a healthy rally, and one that still has room to run on the upside before it flashes a sell signal.
The rally over the past week has been driven by big moves higher in the cyclical sectors. Technology, Financials, Industrials and Energy all have readings above 80%, with Energy the highest at 96%. Defensive sectors like Health Care and Consumer Staples have readings in the 60s. And while 87% of Utilities stocks are still above their 50-days, this is actually down from the 100% reading we saw a week ago.
We've seen some clear rotation out of defensives and into cyclicals recently, which tells us that investors are positioning themselves for another leg higher.
And if you're wondering how this squares with my move to a NET MARKET NEUTRAL rating yesterday, please remember that what this indicates to me is that in general equities {via ETFs for us} are a hold right now. This means we are balanced more or less with buys and sells. Stocks are neither better to sell or better to buy in aggregate at the moment.
*Long ETFs related to the S&P 500 in client and personal accounts.
posted by CR English at 8:00 AM
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