By John Del Vecchio and Brad Lamensdorf
The market has been the little engine that could over the last year. After a nasty move down during the COVID hit, stocks have done nothing but gone up.
Nearly every stock.
Market breadth is now reaching extreme highs.
Take a look at this chart courtesy of SentimenTrader.com
As the chart illustrates, the percentage of stocks in the S&P 500 that are above the 200-day moving average hit 95.23%.
That’s a 15-year high.
From here, one might expect a bit of a cooling off. After all, everything is up. We are now in a situation that is 180 degrees from a year ago.
From here, it likely gets a bit more challenging to generate excess returns.
Can stock push higher from here?
Highs may be tougher to predict because people can keep buying and buying. On the other hand, bottoms may be easier to see because once they have sold all they can, the market looks very washed out and the only place to go is higher.
But at 95%, a level not hit going back 15 years, things would have to be awfully different this time for the not to be a meaningful pullback in stocks sooner than later.
To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.