Momentum Continues To Diverge From Price Action

As we have noted many times before, a simple way of measuring momentum is by looking at the percentage of companies that have a 50-day moving average above its 200-day moving average. Robust bull moves tend to have a rising percentage of stocks where the 50-day moving average is higher than the 200-day moving average. Thus, when we see prices generally moving higher, as we have seen over the past few weeks, but momentum sputtering out that raises a red flag for us. When we look at the MSCI World Index by sectors, we only see one sector (health care) where the momentum isn't flashing a warning sign to us. In the other nine sectors, prices have rebounded by various degrees since the October lows, however, momentum has not turned. Charts illustrating this are below.