A few weeks ago we did a post on the tight range that breadth has been in all year. For more than 130 trading days, the percentage of stocks in the S&P 500 trading above their 50-day moving averages had been between 30% and 80%. After market losses to start the second half of the year, breadth has broken lower. As shown below, just 27% of stocks in the S&P 500 are currently above their 50-day moving averages — the lowest point reached since the October 2014 Ebola scare.
Below is a look at breadth levels by sector as measured by the percentage of stocks above their 50-days. As shown, sectors like Energy, Materials, Technology and Industrials all have horrible readings in the teens now. The two sectors that have shown strength recently are both very defensive in nature — Consumer Staples and Utilities. The two cyclical sectors that have yet to see a significant breakdown in breadth are Consumer Discretionary and Health Care. If the broad market continues lower and investors continue searching for ways to raise cash, we’ll likely see rotation out of these two sectors as well.
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