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Below is a chart included in our weekly Sector Snapshot sent to Bespoke subscribers. It’s a breadth measure that shows the percentage of stocks in the S&P 500 that are trading above their 50-day moving averages. As shown, 74% of the S&P’s current members are now above their 50-days. That’s down slightly from a reading of 77% hit a few days ago, but as you can see, even though the S&P hit new all-time highs recently, this breadth measure didn’t reach a new high along with it. Even still, 74% is a very healthy reading and not one we’d be concerned about. If the S&P remains where it is and this measure starts to dip into the 50s and low-60s, it would be a negative divergence suggestive of lower prices.
Below is a look at the percentage of stocks within each sector trading above their 50-day moving averages. Outside of Telecom (which only has a handful of stocks), the Financial sector currently has the strongest breadth reading at 90%. Technology — a sector that struggled initially after the election — ranks second at 85%, followed by Materials at 84%. Health Care breadth has also spiked quite significantly since the start of the year. One sector that has seen breadth dip recently is Energy. While Energy ran up right along with Financials in the weeks after the election, we’ve seen the two sectors diverge recently as oil prices have dipped. Right now 58% of Energy sector stocks are above their 50-days (versus 90% for Financials).