Majority of Stocks Trading Above 200-Day Moving Average
Some extreme readings are appearing in a few Worden Bros. indicators that look at stocks relative to their 200 day moving averages. One is T2107, which simply looks at the percentage of stocks trading above their 200-Day moving averages. The other is T2109, which looks at the percentage of stocks trading at least 1 standard deviation above their 200-Day moving averages. Both indicators are near all time highs (dating back to 1986).
By Rob Hanna (Quantifiable Edges) -- In fact, the only period of time in which these indicators registered higher readings was in the beginning of 2004. Below is a chart of T2107 which illustrates this:
This demonstrates just how extreme the current move is in terms of breadth. Also interesting about the chart is that we aren’t that far removed time-wise from extremely low readings. Extreme overbought doesn’t necessarily mean a decline is about to begin. In fact the last time these levels were reached in 2004, the market continued to trudge higher for about 2 ½ months before finally beginning a meaningful correction.