Breadth within the S&P 500 Financial sector has been extremely strong lately. Since 2001 there have been 4,157 trading days, and 100% of Financial sector stocks have closed above their 50-DMAs on just 21 of those trading days (just 0.5% of all days). It’s pretty remarkable that 5 of those 21 days have occurred in the first 6 days of this month!
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Below is a look at the percentage of stocks in the Financial sector trading above their 50-DMAs over the last year. While the reading got into the high 90s shortly after last November’s Presidential Election, it didn’t hit the 100% mark until this July 3rd.
The chart below shows the price of the S&P 500 Financial sector since 2001 with days where 100% of stocks in the sector closed above their 50-DMAs highlighted in red. The first time it happened was in early 2009 just after the Financial Crisis lows were put in. The last time it happened was more than four years ago in May 2013. This shows how long it has been since we’ve had full participation in the Financial sector.
Finally, the table below shows how the Financial sector has performed in the weeks and months ahead after breadth hits 100% like it did recently. Below are the dates since 2001 when 100% of stocks in the Financial sector closed above their 50-day moving averages (without having occurred in the prior three months). At the bottom of the table we show the average and media performance of the sector over the next day, week, month, and three months. The results really don’t show any kind of meaningful trend for forward performance when breadth gets this strong.