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| | The Percentage of Stocks Above the 200-day Moving Average is a market breadth indicator that measures the percentage of stocks in an index trading above their 200-day moving average, a key long-term trend line. Traders use this indicator to assess the overall strength or weakness of the market. A high percentage of stocks (above 70%) are above their 200-day moving average, signals broad market strength, suggesting a bullish trend. Conversely, if the percentage is low (below 30%), it indicates market weakness and a bearish trend. Traders may also use the indicator to identify overbought or oversold conditions. A very high percentage (e.g., above 80%) may suggest the market is overbought and due for a pullback. In contrast, a very low percentage (e.g., below 20%) could indicate oversold conditions, hinting at a potential rally. Additionally, divergences between the indicator and the market index can signal weakening market internals, providing a warning of potential reversals. Overall, the % Above SMA(200) helps traders gauge market sentiment and time their entries and exits. |
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