Percentage of Stocks Above Moving Average

The Percentage of Stocks Above Moving Average counts what share of stocks in an index are trading above a specified moving average — typically the 200-day. It is a straightforward breadth measure: when most stocks are above their long-term average, the market is in a healthy uptrend; when few are, the market is weak or correcting.

A simple count with clear meaning

The moving average — typically calculated over 50, 100, or 200 trading days — is a trader’s estimate of fair value for a stock. When a stock trades above it, the price is above the intermediate or long-term trend. When it trades below, the price is below the trend, suggesting weakness or a pullback. The Percentage of Stocks Above Moving Average simply counts how many stocks in an index are above their moving average and expresses it as a percentage.

If 450 out of 500 stocks in an index are trading above their 200-day moving average, the percentage is 90%. If only 100 are, it is 20%. This is unweighted (each stock counts equally) and unsmoothed (the percentage updates daily as stocks cross the moving average).

Interpreting levels and extremes

A percentage above 80% indicates that the vast majority of stocks are in uptrends. This is typical of a healthy bull market and usually a green light to remain bullish or add exposure. Most individual technicians would consider this an environment favorable for long positions.

A percentage below 20% indicates that most stocks are below their moving averages, suggesting a broad downtrend or severe bear market. This is capitulation territory — the sell-off is so deep and widespread that mean reversion is often near. Many traders view readings below 20% as potential buying opportunities because bounces from such extremes are often violent.

The 40–60% range is neutral. In this zone, the market is mixed: some stocks are in uptrends, others in downtrends. Neither bulls nor bears have clear control. This is less actionable than extreme readings, and traders often wait for the percentage to move decisively higher or lower before committing capital.

Confirmation and divergence

When the headline stock index reaches a new high while the percentage of stocks above the moving average also reaches a new high, the rally is healthy and broad. Most individual names are participating, not just the largest cap-weighted names. This is a bullish confirmation.

When the index reaches a new high but the percentage above the moving average rolls over or fails to reach a new high, a warning emerges. The rally is being carried by a shrinking pool of stocks, likely the mega-cap names that dominate weighted indices like the S&P 500 or Nasdaq. The breadth underneath is failing. This divergence often precedes a correction.

The same logic applies to divergences at lows. If the index falls to a new low but the percentage above the moving average does not fall to a new low, it suggests the damage is shallow and bottom-building is underway. This bullish divergence often precedes powerful rallies.

Comparing moving average periods

The choice of moving average period affects the sensitivity and timing of the indicator. A 50-day moving average is more sensitive to recent price action; a percentage above 50-day will swing more wildly and turn faster. A 200-day moving average captures longer-term trend; a percentage above 200-day is slower to change and more reliable for identifying sustained shifts.

Some traders run the percentage for multiple periods simultaneously. A stock above the 50-day might be in a short-term uptrend, but below the 200-day could mean the long-term trend is down. A percentage above the 50-day might be 70% while the percentage above the 200-day is 40%, showing that short-term momentum is good but the market’s long-term health is poor. This layered view helps traders distinguish tactical bounces from strategic reversals.

Relationship to other breadth measures

The Percentage of Stocks Above Moving Average is fundamentally a price-positioning measure. The Advance-Decline Line is a momentum measure (winners minus losers). The McClellan Oscillator and McClellan Summation Index smooth daily advance-decline data. The Bullish Percent Index counts Point-and-Figure buy signals. Together, these measures paint a complete picture of market health from different angles.

When all of them align — a high percentage above the moving average, a rising Advance-Decline Line, positive McClellan momentum, and a high Bullish Percent Index — the market has structural strength and the environment is favorable for long positions. When they diverge, it signals conflict. A high percentage above the moving average combined with a falling Advance-Decline Line, for example, suggests price support from a few large names while the underlying market is deteriorating.

Tactical applications in sector and stock selection

Investors and traders apply this measure at multiple levels. Some watch the percentage for the overall market. Others calculate it for individual sectors, revealing which industries have the strongest participation. A sector with 90% of its stocks above the 200-day average is in a robust uptrend; a sector with only 30% is in trouble.

The measure also informs sector rotation decisions. When technology has 75% of stocks above the moving average and energy has only 25%, it suggests rotating out of energy and into technology. As the percentage shifts — energy rising to 60% while technology falls to 50% — it signals the rotation may be ending and it is time to reassess positioning.

For individual stock selection, the percentage provides context. A stock that is well-positioned relative to its moving average in a sector where 80% of stocks are also well-positioned has a better chance of advancing. The same stock in a sector where only 30% are above the moving average faces headwinds from the broader trend.

See also