U.S. stocks have taken it on the chin this week, turning what had been a decent month for equities into a very mediocre one. The S&P 500 closed below its 50-day moving average today, meaning the short-term trend for the market has turned negative. Within the index, only 40% of stocks are currently trading above their 50-days. As shown below, this is about as weak as we’ve seen breadth so far this year.
Below is a sector breakdown of breadth levels using the percentage of stocks above their 50-day moving averages. As you can see, sectors like Health Care and Consumer Discretionary have really been hit hard. Health Care is used to having the strongest breadth of the market, but it currently has close to the weakest with just 26% of stocks above their 50-days. Consumer Discretionary is the only one with a worse reading at 25%. Energy, on the other hand, has the strongest breadth with 90% of stocks above their 50-days. We’ve certainly seen quite a bit of rotation recently, with winning sectors like Health Care and Consumer Discretionary beginning to underperform just as Energy is outperforming.