There Are Just Less Stocks In Uptrends
- Posted by JC Parets
- on October 4th, 2013
This is a market of stocks after all. So if the major averages are going higher, then you need participation across the board. You can’t have just a few names heading higher and expect the S&P500 to rally another couple of hundred points.
Tonight on CNBC Fast Money we’re going to talk about the percentage of S&P500 stocks that are trading above their 200 day moving average. If a stock is above its 200 day, it’s probably not in a downtrend right? It’s probably in some sort of constructive trend. So I like to use this as a good gauge of the overall health of the market.
Back in early May, as the S&P500 was breaking out above 1600 I loved the market and expected it to go higher. One of the reasons was the expanding list of stocks in uptrends (or above their 200 day moving average) – Cick here to see the explanation in my CNBC appearance.
But over the last few months, as the market has made new highs (and then failed quickly each time), there has been less participation. In other words, with each new high in the S&P500, less stocks are in uptrends. Here is the chart:
We’ll get into much more detail this afternoon on CNBC Fast Money and talk about how to best take advantage of this divergence in terms of both longs and shorts in the stock market. So make sure you tune in!
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
- Are Coal Stocks Poised for an Epic Breakout?
- Small Caps Act Poorly On a Relative Basis
- Bond Market Keeps Diverging With Stocks
- The Worst Possible Time to Own Gasoline
- Momentum Monday with Howard Lindzon
- FOX Business: Brazil Over Germany This Summer
- What Do You Think About Bonds?
- Buying Brazil and Selling Germany
- Mystery Chart: What Do We Do Here?
- The Dog Days of Summer Are Upon Us
Archive by Year