Half Of S&P 500 Stocks Still Below 200-Day Average, Ignoring Covid-Like Rally: 10 Bargain Plays For Latecomer Bulls

Late to the bull party? Nearly half of S&P 500 stocks continue to show no significant trend breakthroughs to date.

What Happened: SPDR S&P 500 ETF Trust SPY gaining over 10% since Oct. 27. This marks the index’s strongest 17-day rally since November 2020, a surge initially fueled by the Covid-19 vaccine breakthrough.

The year-to-date return for the broader market now stands at 18%, nearly doubling the 30-year average annual return of 9.862%. However, this bullish sentiment isn’t uniformly reflected across the board.

Surprisingly, only about 52% of S&P 500 components are currently trading above their 200-day moving average, often viewed as a key technical determinant of a stock’s long-term trend.

Rewind to November 2020, a comparable rally saw 90% of S&P 500 stocks trading above their 200-day moving average.

Chart: S&P 500 Had Its Best 17-Day Rally Since November 2020

Top 10 S&P 500 Stocks With The Widest Discounts

Only about 52% of S&P 500 components are currently trading above their 200-day moving average, despite the robust rally of the past weeks.

Some stocks — EPAM Systems Inc. EPAM, Citigroup Inc. C, Quest Diagnostic Incorporated DGX, and Agilent Technologies Inc. A — are hovering near these levels. Others are lagging considerably behind.

The table below reveals the 10 S&P 500 stocks exhibiting the largest price discrepancies when compared to their 200-day average levels.

Name	Last Price	% Distance vs. (200-Day Avg.)
SolarEdge Technologies, Inc. SEDG	78.87	-64.91%
Illumina, Inc. ILMN	95.72	-46.74%
FMC Corporation FMC	53.11	-44.98%
Enphase Energy, Inc. ENPH	98.16	-37.97%
Paycom Software, Inc. PAYC	178.38	-37.31%
The Estée Lauder Companies Inc. EL	120.10	-36.44%
Albemarle Corporation ALB	125.97	-36.37%
Moderna, Inc. MRNA	77.42	-35.96%
Align Technology, Inc. ALGN	215.07	-30.99%
Walgreens Boots Alliance, Inc. WBA	20.87	-28.27%

Risk of Value Traps?

A stock significantly below its 200-day moving average may indicate either a potential bargain or a fundamental issue with the company.

A value trap occurs when a stock appears to be cheap but is actually fairly priced due to declining business prospects.

Therefore, it’s crucial to differentiate between a stock that’s undervalued due to market overreactions and one that’s declining due to underlying business problems.

In conclusion, despite being a a powerful tool for understanding long-term market trends, the 200-day moving average also has its own limitations. It’s a lagging indicator, meaning it reflects past price movements and may not accurately predict future trends.

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