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NYSE Percent of Stocks Above 200-Day Average Stabilizes

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One of the warnings that I wrote about over the summer was the drop in the percent of NYSE stocks trading over their 200-day average. I pointed out over the summer (before the August plunge) that a stock market couldn't maintain an uptrend while two-thirds of its stocks were in downtrends (below their 200-day lines). Chart 1 is an updated version of those earlier charts, and carries good and bad news. First the good news. The red line has fallen below 20% which puts it in a major oversold condition. This is a logical spot for it to attempt a bottom. The bad news is that the red line is still in a downtrend. That has to change. Chart 2 shows the downtrend starting in late April from a +60% reading. Its been all downhill since then. To the bottom right, the line is starting to stabilize (red circle). That's encouraging. But it needs to more to signal a bottom. A good start would be a rise above its late August peak at 24%. A more convincing move would be above its early August high at 42%. It may take awhile for that to happen. But the bottoming process may have started.

John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, an renowned author in the investment field and a former technical analyst for CNBC. With over 40 years of market experience, he is the author of numerous popular works including Technical Analysis of the Financial Markets and Trading with Intermarket Analysis. John's timely market commentary and expert analysis is available exclusively for StockCharts Members through his Market Message blog. Learn More
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