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Percentage of SPX Stocks Over 200 Day Moving Average
Posted By Barry Ritholtz On May 23, 2013 @ 11:30 am In Markets,Sentiment,Technical Analysis | Comments Disabled
Jeff deGraaf, technician extraordinaire (formerly of Lehman now at Renaissance Macro Research) makes an interesting observation about the heavily overbought markets.
Last week, the S&P500 had ~93% of all stocks trading over their 200 day moving average. Normally, this degree of overbought should lead to a correction. As you can see in the inset box, it sometimes does.
However, if you are looking out a year, we see that over the past 3 instances, markets have been higher.
The takeaway is that you should determine if you are a trader or an investor before thinking about whether to lighten up or add on dips.
Different timelines and holding periods should consider different responses to the volatility.
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2013/05/percentage-of-spx-stocks-over-200-day-moving-average/
URLs in this post:
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/05/200-day-MA.png
 Index Indicators: http://www.indexindicators.com/charts/sp500-vs-sp500-stocks-above-200d-sma-params-3y-x-x-x/
 StockCharts: http://stockcharts.com/h-sc/ui?s=%24SPXA200R
 Decision Point: http://www.decisionpoint.com/tacourse/200ema.html
 measure here: http://stockcharts.com/help/doku.php?id=chart_school:technical_indicators:percent_of_50-day_mo
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