As the recent (and by ‘recent’, I mean three days, people) pick-up in volatility has sparked the inevitable spike in articles seeking to explain the why’s and wherefore’s of market movements, we take a look at the percent of issues that are above their respective 65-day moving averages for a given group of stocks to see what has (and hasn’t, for the most part) reached oversold, potentially buyable extremes.

Just over 50% of developed market issues are currently trading above their 65-day moving averages (blue line), down from 75% last week as the GKCI DM Index fell ~4% (red line). Whether the percent of issues continues to oscillate between 50% and 80%– as it did for much of 2013 and the first half of 2014– remains to be seen. Since mid-2014, the indicator has tended to reach more extreme oversold conditions (20% or less of the issues trading above the 65-day moving average) before heading in the opposite direction– a condition that has produced less linearly inclined index results.

image

By region, DM Americas has experienced the sharpest decline in shares above their 65-day moving averages, while DM EMEA and DM Asia indicators have fallen less enthusiastically.

image

image

image

In the emerging markets, the percent of issues above 65-day moving averages has fallen from 83% a month ago to just 44% now while the index price has not moved very much at all.

image

Regionally, EM Americas has led its EM EMEA and EM Asia counterparts, falling from 76% a week ago to just 31% currently.

image

image

image

Developed markets sectors show mostly moderate pull-backs from overbought levels, with only two groups retreating to fully oversold conditions– telecommunication services and utilities.

image

image

image

image

image

image

image

image

image

image

Among emerging markets, none of the sectors has triggered an oversold signal, though half of them are in the 30% range (consumer staples, energy, health care, materials, and telecommunication services). The financials sector has remained resilient in both the developed and emerging markets.

image

image

image

image

image

image

image

image

image

image

Overall, it appears investors will have to endure a little more market excitement before those oversold signals become more widespread.

Sign up for reports from Gavekal Capital