Stocks have continued to rally this week and for many individual names, these gains have lifted them above their 50-DMAs. As shown in the chart below, over three-quarters of stocks in the S&P 500 have now moved back above their 50-DMAs.Three sectors—Technology, Communication Services, and Health Care—have more than 90% of their stocks above their 50-DMAs with Health Care leading the way at 96.7%. Readings above 90% are very rare — just as rare as the sub-10% readings we saw in March. As for the other sectors, similar to the S&P 500, Consumer Staples, Consumer Discretionary, and Materials all have over three-quarters of their stocks above their 50-DMAs. Meanwhile, Financials, Industrials, and Energy are lagging somewhat but still have more than half of their stocks above. The only two sectors that are truly lagging with just 32.1% and 38.7% above, respectively, are Utilities and Real Estate — two defensives.
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Health Care and to a lesser degree Consumer Staples were the first sectors to see a large number of stocks trade above their 50-DMAs. This reading for both sectors saw a more gradual build throughout April. As for the rest, the percentage of stocks trading above their 50-DMAs has exploded higher and in a much more rapid fashion, especially within the past week. In fact, as recently as last Thursday, excluding Health Care and Consumer Staples, the highest reading across sectors was only 40.85% (Technology). The big pickup in the number of stocks moving above their 50-DMAs means two things. For starters, many stocks are clearing resistance at their averages which is a positive technical development. Second, many stocks are roughly around the same areas of their trading ranges and are moving higher together (strong breadth).
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