Significantly fewer stocks participated in the last S&P rally, warns Andy Dodd, Head of Technical Research at Louis Capital Markets, and there have been increasingly fewer stocks moving back above their 50-day moving averages on the last two moves higher (see Chart 1). Moreover, only 40% of S&P 500 members currently have a MACD above the zero line (stocks that are trending higher tend to have a MACD above zero, and the opposite when they are trending lower) – see Chart 2.
Dodd notes that the same is true for both the NASDAQ and the STOXX Europe 600. Just 34% of NASDAQ members have a MACD above the zero line. In Europe the STOXX Europe 600 paints a similar picture with fewer members moving back above their respective 50-day moving averages each time the index rallied and less than half have a MACD above the zero line, indicating that more are trending lower than higher.
