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Monday
Nov112013

S&P 500 Sector Breadth

In the S&P 500, 76% of stocks are currently trading above their 50-day moving averages (50-DMA).  The 50-day is used as a gauge to measure whether a stock is in a short-term uptrend or short-term downtrend.  With more than three quarters of the stocks in the S&P 500 currently in short-term uptrends, underlying breadth remains healthy for the market.

Below is a chart highlighting the percentage of S&P 500 stocks above their 50-days going back to October of last year.  As you can see, we haven't had a blowout reading above 90% in more than six months.  Since June, the reading has peaked out in the mid-80s three times before eventually pulling back.  On the pullbacks, the percentage of stocks above their 50-days bottomed out at a higher level than the time before.  This means we've seen a series of higher lows in breadth when the market has gone through periods of decline this year.  It has been awhile since we've seen a huge wave of selling that has pushed every area of the market into oversold territory.

Below is a look at current breadth readings for the ten S&P 500 sectors.  As shown, half have breadth readings that are weaker than the overall index, and half have readings that are stronger.  The five sectors with stronger breadth readings than the S&P 500 as a whole are Consumer Staples, Utilities, Materials, Industrials and Financials.  All five of these sectors have more than 80% of their stocks currently above their 50-days.  The five sectors underperforming the main index in terms of breadth are Energy, Technology, Telecom, Health Care and Consumer Discretionary.  Keep in mind, though, that Energy is the weakest with a reading of 63.6%, but that isn't a negative breadth reading at all.  Overall, things are pretty healthy here.