PERCENT OF S&P 500 STOCKS ABOVE THEIR MOVING AVERAGES LOOKS STRETCHED

% OF S&P 500 STOCKS ABOVE 50-DAY AVERAGE IS HIGH... Market breadth figures for the stock market remain quite strong.   A couple of them, however, suggest that the market may be stretched on the upside.   Chart 1 shows the percent of S&P 500 stocks above their 50-day moving average nearing 90% which is the highest level since last June.  That's a sign of strength.   From a sentiment standpoint, however, readings near 90% also suggest an overbought market.   That may simply be suggesting that the stock rally is in need of a pullback or a period of consolidation to work off that overbought condition.   Comparisons to 200-day moving averages are even more stretched on the upside.

% OF S&P 500 STOCKS ABOVE 200-DAY AVERAGE IS EVEN HIGHER...Chart 2 shows the percent of S&P 500 stocks above their 200-day moving average reaching 95%.  That's the highest level in more than a decade.    There again, that's a sign of market strength.   But from a sentiment standpoint, it also suggests that the market's uptrend is looking stretched on the upside.   Which is just another way of saying that the market's current uptrend is looking overbought.