With Monday’s 130-point drop in the Dow Jones Industrial Average, the % of NYSE stocks above their 200-day moving average dropped from to 64% from 80% on April 29 and from readings consistently above 75% this month. Is this a warning sign of a pending market decline?
The last time this happened – NYSE stocks above their 200-day ma dropped from 79% to 59% during the first week of May, 2010 – the market recovered then declined 14% to its June 28 low and “struggled” for two more months until the September 2010 rally began.
Will history repeat? Time will tell.