In fact, the average has been slowly declining since at least the beginning of 2013.
At first glance, you may say that this indicator has the ability to quickly jump to high percentages, so what’s the problem? But let’s take the 50% level as an arbitrary level of stocks, on average, painting a positive picture. The simplest way to judge a stock being in a bull market (an inclination to rise) versus a bear market (an inclination to fall) is whether it is above or below its 200-day moving average. So being above the 50% level is the mark where the majority of stocks are showing a bullish attitude.
But the sudden jumps in the indicator apparent in the above chart actually took considerable time to develop. When the indicator finally rose above 10% in late March of 2009, it took two months before the percentage of stocks above their 200-day MA rose above 50. And back in mid-2001, when the indicator fell to 11%, it took five months for the number of stocks to become greater than 50%.
Also notice that the percentage of stocks above their 200-day MA fell below 40 back in mid-2007, well before the market crash in September of 2008. At the start of the crash, the percentage of stocks was down in the low 20’s. Stocks had actually been in a selloff since early 2007. It took the failure of a few U.S. banks in late 2008 for anyone to notice.
With the current decline in the percentage of stocks having trended lower for three years, is it any wonder the S&P 500 could not set a new high in late 2015, after numerous attempts? Is there much hope for a quick rebound to mid-2015 highs? Or could the stage set for a late 2008-style crash, possibly being triggered by the failure of a too-big-to-fail bank, or the bankruptcy of a major oil company?
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
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