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Thursday, July 20, 2006

Market Breadth Update


This is interesting (click on the chart). I've been tracking down the number of stocks in the S&P, Nasdaq COMP, and Russell indices that are still trading above their 200 day moving averages. (You'll be surprised how much time I can kill with this kind of market.) I started last June 16 when the markets were falling like rocks. To clearly summarize the numbers:

Number of stocks above 200 day MA
Index..........June 16........Rally.........July 20
SPX............215............279...........208
COMP...........1208...........1461..........1058
Russell........1127...........1576..........1178

A lot of stocks went back above their 200 day moving averages when the rally occurred. But a lot also went back and the number of stocks below 200 MA went into new lows except for the Russell index (probably because of volatility). There is reason for this exercise. If the market is really going to be weak in the coming months, then the weakness will be reflected in most of the stocks, and not in a select few which I think is what happened last night - rallies on heavily weighted stocks in the indices.

Bryan

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