The move out of the trading range has been at lightning speed and associated with strong internal strength. The percentage of the S&P 500 (SPX) components trading above their respective 50-day moving averages hit 97.8% yesterday – a rarely seen level. We looked at prior occurrences of such short and intermediate-term strength two different ways to gauge the implications and found that it was a terrific long-term signal but only after a period of consolidation (Figure 1):
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