That whiff of equity markets' bad breadth with fewer stocks above 50-day moving averages needs to be brushed up for the bull case

The market's definitely come a long way since my post, Promising improvement in markets' bad breadth may have investors breathing better too (3/7/09)! As I showed earlier this weekend, the McClellan data now show that market breadth has fallen again and needs to be watched for whether - or not - it gets "support" at the lower or shallower uptrend line I marked on the NYSE and Nasdaq McClellan charts. And I posted the bullish percent charts yesterday; so for another view of internal strength, let's take a look at the percentage of index stocks above their 50-day moving average. Stockcharts.com makes this available for the NYSE with the ticker, $NYA50R (see chart below, for which I've added the CCI indicator, moving averages (13 and 34 day exponential moving averages (ema) and 50 day simple moving average (sma)). Then I also added the NYSE ($NYA) price index in the bottom window, along with its 50 day sma.

There's been a substantial drop in the percentage of NYSE stocks that are above their 50 day sma's, from 93.72% in early May to 67.81% on Friday. If it's of any interest, its own 200 day sma (not shown here) which had generally declined from mid-2007 through mid-March down to the 30% level, has also risen but is still well below at about the 44% level.

This doesn't tell us that this breadth participation cannot move higher again, if a number of NYSE stocks regain their 50-day moving average. What it does tell us is that fewer individual stocks are in the bullish mode of being above this important moving average. In this regard, it's telling us information that is similar to the "bullish percent" charts that I posted yesterday. (I received a good inquiry about this from one reader who wanted to know which P&F settings I used, and the quick answer is that I only use Stockcharts.com's default settings.) Between these charts, and the McClellan data, we know that breadth and bullish participation have weakened measurably at this time. This percentage will need to move up in order to support a more bullish posture for the equity markets generally.

What about the percentage of NYSE stocks above their 200 day sma? I ran that too and the chart for that is at bottom below (and with the NYSE price index window including its 200 day sma as well). Like the 50-day sma based chart, it too rose from abysmal levels in March, in this case to a recent high at 69.51% from which it dropped slightly to 65.31% on Friday. Of course it will be important for this percentage also to increase in order to support the bullish case for equities generally.

*UPDATE at 1:04 pm - I'm also adding the same charts for Nasdaq below, as well as the advance/decline (cumulative) charts for NYSE and Nasdaq further below.