$SPY Market Breadth - Percent Above 50 DMA, 150 DMA

Let's take a look at a couple of charts showing the percent of S&P stocks above their 50 day moving averages, and 150 day moving averages.  First the 50 day chart:

You'll notice that we rarely drop much below the 20-25% range unless we are starting a new downtrend.  The May-June drop well below 20% is ominous in this regard.  It is my belief that we have begun a new downtrend.

In addition, you'll note that during downtrends, rallies don't make it past the 75-80% resistance zone.  Currently, we are sitting at 73%.  Based on this reading of the chart, we are very near a top.

Here's the 150 day chart:

Similarly, you'll note that breaks below the 35-40% range usually signify downtrends, while breaks above 60-65% are characteristic of up trends.   Up trends tend to find support at the 60-65% and 35-40% range, while downtrends find resistance at the 60-65% range.

Recently, we broke well below 35%  on the 150 day, and currently we are at 57%, both of which confirm the interpretation of the 50 day chart that we are near a top in a new downtrend.

If we manage to break through the resistance zones for downtrends (75-80% on the 50 day, 60-65% on the 150 day), the "new downtrend" will be placed in serious doubt.