Here’s one reason to believe that bearishness is getting long in the tooth. Less than 2% of S&P 500 stocks are above their 52-week moving average.
Basically the entire market has been creamed and historically this has been a decent trading opportunity.
“…a number of significant buying opportunities have been identified in the past after periods of market weakness have caused the percentage of stocks above their 10-day moving averages to drop below 10%.”
I mentioned the financial and energy sector in passing yesterday as being extremely oversold with just 1% (or less) of stocks closing above their 50 day moving average. Today the banks got a major boost, rising much more than the general market proxies. Most are attributing this to the passing of the Wall Street regulation bill in the Senate on Thursday night. As a technically oriented trader I prefer to think of it as an expected reaction to the extremely oversold condition in that sector.
Even if you believe we’re heading lower in the long-term, perhaps we’re in for a near-term bounce.
(Via Abnormal Returns)
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