We Haven't Seen This Many S&P 500 Stocks Flashing This Sell Signal In 30 Years

David Dierking

U.S. stocks have remained remarkably resilient in the face of 13% unemployment, expectations for -40% GDP growth and an unknown end date to the COVID-19 pandemic.

Investors, instead, seem more focused on the fact that the Fed will seemingly rescue and backstop any financially distressed asset it encounters.

Investors may still be optimistic, but some technical signals are not.

The MACD indicator isn't just saying that stocks are looking like a sell, it's saying so fairly decisively.

20200625-043831_1593059910692
source: www.sentimentrader.com

As it stands today, more than 70% of S&P 500 stocks come with a MACD sell signal. That's the highest percentage in at least 30 years, when the number hit roughly 65% back in 1990.

Of course, this isn't a guarantee that a big decline in U.S. stocks is imminent or even likely. But these readings do tend to spike around periods of high volatility and high volatility tends to correlate with higher risk.

Reinforcing this bearish notion is the fact that the Nasdaq, Nikkei and European stock indices are also showing a multi-decade high percentage of stocks showing sell signals.

With the coronavirus starting to rapidly spread once again and states already looking to take steps to pause reopening plans, now would be the time to strike a more cautious tone.

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