Extreme Levels Of S&P500 Stocks Above 50 Day Moving Average

There is a ton of chatter out there about the amount of stocks currently trading above their 50 day moving average. We have come a long way fast - about 20% off the lows this month for the S&P500. Going into today, 94% of stocks in the index were trading above their 50 day Moving Average. These are some extreme levels:

(Chart via Pragmatic Capitalism)

I think this really plays into my thesis that taking some money off the table last week was probably a good idea. I mentioned how doing so was very difficult considering how bullish everything looked (see Here & Here).

October's action was definitely a win for the bulls as the false move created a huge short squeeze. But now the battle begins with the 200 day moving average and 61.8% Fibonacci retracement around this 1270 level. I would not be surprised to see a test of 1230, near the top of the August/September range. This would allow the 50 day moving average to catch up and set up a nice risk/reward to re-enter the market.