Examining historical moves above 50% for the Weekly Distribution for the S&P 500 Indicator (^WDSPX).

The S&P 500 Weekly Distribution indicator ^WDSPX recently moved above 50.  This indicator measures the average weekly distribution of all the stocks in the S&P 500.  Moves above 50 are very rare.  When we see internal strength like this it is often a sign that the market will continue rather than pull back from overbought conditions.  We have seen this same thing from a number of other indicators over the last 4-6 weeks.

Below are the instances when the indicator rises to 50 or higher and instances when the indicator rises to 40 along with the forward S&P 500 total returns.  It’s certainly not a given that the market has to move higher from here, but the historical data shows we may not see a significant pullback even with so many stocks in the S&P 500 overbought on their weekly distribution.