We’ve shown this chart several times before, most recently on January 23rd: It is the percentage of NYSE stocks trading above their 200 Day Moving Average.
From that January 23rd trough low, the S&P500 gained ~10% over 10 days; from that February 1 peak, the next 4 days saw a 5.7% selloff. Net net from the January low, we are up 7.25%.
% of Stocks on the NYSE > than 200 Day Moving Average
Chart courtesy of Bloomberg, Fusion IQ
The present reading on the % of NYSE stocks above their 200 Day Moving Average indicator is at readings that — at least in the early part of the market cycle — have led to strong rallies in the short run. The first 3 readings (far left of chart) were deeply oversold conditions caused by a) the initial collapse from March 2,000; b) The 9/11 sell off; and c) the sell off following that 9/11 selloff/bounce.
So far, this reading has produced a peak rally reading of 9.6% at its recent high price. This is a far cry from the past bounces.
If you believe — and this is a big if — that history will repeat itself, then we still have a ways to run. If you expect those prior bounces were materially different than today, than this rally may run out of steam.
This is a set of circumstances where opinions can legitimately differ. Discuss below (please avoid ad hominum attacks)