Wednesday, April 15, 2009

Market Sentiment: Sharp Improvement in Percentage of Stocks above 200-day MA

Short term breadth is very toppy but there has been a marked improvement in the Percentage of Stocks Trading above their 200-day MA. As of Tuesday's close there was 17% of S&P stocks above this moving average, breaking the sub-10% malaise which had afflicted S&P members back to the start of October 2008.

The Percentage of Stocks above the 50-day MA has popped to 83% and is certainly in need of relief with some profit taking. With a bit of luck this might find support around the 30% mark and not the sub-5% level achieved late last year. The Bullish Percents haven't reached the highs of January but this is not surprising given the strong bear action prior to January was more conducive to counter buy signals than the weak bearish action since.

Will March lows hold into 2010? Back in the day I thought January 2008 lows were an important bottom but looking back on the chart they were simply a blip in a much larger decline.
Dr. Declan Fallon, Senior Market Technician, the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.