We’re a few weeks into Q2 and there remains an insatiable risk appetite for US equities. The below chart outlines the S&P 500 and the percentage of stocks above their 200-day moving average. Moving averages help us not only identify trend direction, but the strength of trend as well. If a specific stock index is printing new 52-week highs, but the percentage of stocks above their respective 50 or 200-day moving average is declining – this would constitute a bearish divergence. It is signaling that although the index is forming new highs, not all of its constituents are necessarily participating in the move higher. During the recent rally in the S&P 500, the percentage of stocks that were trading above their 200-day moving average reached its highest level in over 15 years. That’s one strong move!
awesome summary of the market