The chart below compares the S&P 500 to the % of stocks on the NYSE trading above their respective 200 day simple moving average.
The white line has taken quite the plunge recently and traded below the orange line (SPX) all year.
More importantly however let me point out how both bulls and bears can get their way with the chart…lies, darn lies and statistics…
Bull case: The fact that relative to price so ‘few’ stocks have traded above their 200 sma is bullish. Equities are cheap
Bear case: The fact that stocks are struggling to get above their 200 sma’s in absolute terms shows lack of strength and commitment – bearish.
My own take: As long as I don’t see markets functioning naturally (w/o central planning) I simply refer to price action, pick my spots and set stops.