% of Stocks on the NYSE > than 200 Day Moving Average

Tuesday, February 19, 2008 | 10:59 AM

We've shown this chart several times before, most recently on January 23rd:  It is the percentage of NYSE stocks trading above their 200 Day Moving Average.

From that January 23rd trough low, the S&P500 gained ~10% over 10 days; from that February 1 peak, the next 4 days saw a 5.7% selloff. Net net from the January low, we are up 7.25%.
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% of Stocks on the NYSE > than 200 Day Moving Average

Nyse_stocks_200_day_ma

Chart courtesy of Bloomberg, Fusion IQ

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The present reading on the % of NYSE stocks above their 200 Day Moving Average indicator is at readings that -- at least in the early part of the market cycle -- have led to strong rallies in the short run. The first 3 readings (far left of chart) were deeply oversold conditions caused by a) the initial collapse from March 2,000; b) The 9/11 sell off; and c) the sell off following that 9/11 selloff/bounce.

So far, this reading has produced a peak rally reading of 9.6% at its recent high price. This is a far cry from the past bounces.

If you believe -- and this is a big if -- that history will repeat itself, then we still have a ways to run. If you expect those prior bounces were materially different than today, than this rally may run out of steam.

This is a set of circumstances where opinions can legitimately differ.  Discuss below (please avoid ad hominum attacks)

Tuesday, February 19, 2008 | 10:59 AM | Permalink | Comments (31) | TrackBack (0)
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Comments

So far so ugly today. A well advertised rally is having a hard time growing legs. Credit troubles trumping "attractive" stock valuations? Its easy to forget how small the stock market is versus derivative market. Dog wagging the high profile tail this time?

Posted by: cathompson | Feb 19, 2008 11:11:37 AM

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