The S&P 500 has gone from less than 5% of stocks above the 50-day Moving Average to over 85%, a historically bullish development.
However, the occurrence in August didn't draw higher prices like it has in the past. Watching if this time is different. pic.twitter.com/nXYUDdTmdU— Andrew Thrasher, CMT (@AndrewThrasher) November 23, 2022
Today’s Chart of the Day was shared by Andrew Thrasher (@AndrewThrasher). Breadth has made some noteworthy improvements lately. While the S&P 500 remains below its 200-day moving average, over 61% of its members are above their respective 200-day moving averages. Short-term breadth has also bounced back from extremely low levels. The percentage of stocks above their 50-day moving average has gone from 3% to 89% in less than two months. Andrew points out that, that when this indicator has risen from <5 % to >85%, it has historically signaled further gains. Its reputation has been slightly tarnished by its recent failure in August. However, this indicator has generally done a good job of signaling the start or continuation of a bull phase over the past thirty years.