Here is an interesting table of data I just derived from running the Alert HQ process. We scan about 7200 stocks and ETFs each weekend looking at various technical analysis characteristics. The following table shows some numbers for the stocks in the S&P 500.
What we have is the number of stocks in the index whose 20-day moving average is above their 50-day moving average. The data is presented by industry sector.
| 20-day MA above 50-day MA |
Industry Sector |
| 29 |
Consumer Discretionary |
| 15 |
Consumer Staples |
| 3 |
Energy |
| 35 |
Financials |
| 26 |
Health Care |
| 11 |
Industrials |
| 22 |
Information Technology |
| 11 |
Materials |
| 3 |
Telecommunications Services |
| 8 |
Utilities |
When the 20-day moving average of a stock is above its 50-day moving average, it is generally considered to be a bullish sign.
From the table we see that after the recent down week in the markets there are now only 163 stocks out of 500 with a 20-day MA above a 50-day MA. That is roughly equal to one third of the stocks in the index.
The good news is that this doesn't seem to indicate an especially overbought situation.
The bad news is that it doesn't indicate the index is registering a strong move upward.
The unexpected news is related to the industry sectors.
The numbers are highest for Financials and Consumer Discretionary. These are the two sectors that most analysts consider to be the weakest from a fundamental viewpoint. It proves, however, that the stocks that were most beaten down a couple of months ago have made quite a comeback. Roughly a third of the stocks in these sectors are doing well. Can they hold onto their gains?
Many analysts have also been surprised that the Health Care sector has not performed better given that it is often a refuge when markets are in trouble. We see here that the sector isn't doing badly.
Large cap Tech was expected to do well and we see that the Information Technology sector is indeed delivering decent strength with 22 of 71 stocks still bullish.
What is most surprising is the Energy sector. With oil prices going through the roof, it would be natural to expect this sector to be leading the market. Instead we see only 3 of 36 stocks with their 20-day MA above the 50-day MA.
What are the moving average statistics telling us? Don't be surprised if we see a rotation out of Financials and Consumer Discretionary and further into Tech and Telecommunications. The recent market rally has crested and general weakness in stocks was detected again this week. If we are actually in a new trading range as I discussed in a post last week, it would make sense to see some of the former leaders decline, making room for a new set of market leaders.
And if the major indexes indeed test their lows again, we might once again see the Utilities and Consumer Staples outperform.
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