Which Sectors Have Participated the Most in This Rally?

As we mentioned last week, the percentage of stocks above their 50-day moving average had risen to 86%, suggesting that the recent rally needed to digest some of its enthusiasm.  As we observe this indicator again this week, now standing at 83% (see the updated chart below), we note that while it did move up close that that 90% level that has pretty much capped the upward momentum of the rallies of the last two years, it didn't quite make it.

Click on the image above to view a larger chart.

In the ensuing months, we expect rallies to be able to develop that full potential, and this current rally could do that in the next few weeks.  But the bottom line is that "usually" these levels are close to a zone when the market takes a breather.  That is our current expectation, but this certainly does not disrupt the continuing long-term bullish expectations as defined by our Asset Allocation Model.

Also, it is interesting to see which sectors have participated the most in both the S&P 500 and S&P 400, along with the combined "S&P 900," in the rally of the past few months.  You can see this action in the tables below.

Click on the image above to view larger tables.

Overall, our Asset Allocation Model continues to be positive on the long-term; however, we continue to pay close attention to the action of the short-term.

Don Hays

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