S&P 500 and Sector Breadth

Below is an updated snapshot of sector breadth as measured by the percentage of stocks trading above their 50-day moving averages.

As shown, breadth recently stalled for the S&P 500 as a whole before it could get up to the levels seen back in late 2011 and early 2012.  At the moment, 70% of stocks in the S&P are above their 50-days, which is a strong number but still indicative of a market where not all stocks are participating.  Part of the reason why breadth didn't get up to the highs from earlier this year is because defensive sectors actually sold off as the market was rallying last week.  So while breadth isn't as strong as some bulls would like it to be, the fact that it's the defensives holding things back is a good sign.

You can see the rotation out of defensives and into cyclicals in the charts below.  All of the cyclical sectors with the exception of Consumer Discretionary have readings in the high 70s and 80s.  Energy and Industrials have the highest percentage of stocks above their 50-days at 89% and 85%, respectively.  On the flip side, 58% of Health Care stocks and 54% of Consumer Staples stocks are above their 50-days, while just 13% (yes, 13%!) of Utilities stocks are above their 50-days.  As long as the cyclicals are leading things higher while the defensives are struggling, bulls can sleep well at night.

Become a Bespoke subscriber today to access Bespoke's Model Stock Portfolio -- beating the S&P 500 by 27 percentage points since inception in May 2007.