A 200-Day Divide

At the end of last week, 75% of S&P 500 Technology stocks closed above their 200-DMAs for the first time in 219 trading days.

That streak of fewer than 75% of stocks above their 200-DMAs is the ninth-longest on record. The longest streak was 759 trading days ending on April 22, 2003, after the Dot-Com bust.

Technology has generally continued higher after these extended stretches ended. Average forward returns ranged from 1.6% one week later to 33.4% a year later, with positive returns at least 75% of the time at every checkpoint. Incredibly, one year later, the sector was higher all seven times.

Even after its recent improvement, Technology is hardly exceptional compared with the rest of the market. Six S&P 500 sectors have a larger percentage of stocks above their respective 200-DMAs, led by Financials at 84.2%. At the other end of the spectrum, Utilities sits alone with Communications Services as the only two sectors with fewer than half their constituents above their 200-DMAs. Utilities, though, is clearly at the bottom with just 29%.

The reading for Utilities isn’t just low compared to other sectors, but is also low historically for itself, as similar levels haven't been seen since Valentine’s Day of 2024 (623 trading days).

As the only oversold sector in the S&P 500 relative to its 50-DMA, Utilities has also seen its relative strength versus the S&P 500 drop to a 52-week low as it has underperformed the index by 17.5 percentage points.