Since the most recent rally began back in early September and the S&P pierced through its 50-day moving average, the index has steadily remained above this technical level, briefly testing its lower range, but bouncing back as investors flocked to the stock market.
Moving averages are widely used to determine trends and smooth out price fluctuations, defining support and resistance numbers.
Investors trading off these metrics tend to look for certain unusual patterns that may develop, taking advantage of any extreme price movements.
Consider the S&P 500, for example, which has traded, on average, 3.7 percent over its 50-day MA in the past four months, crossing below this level only twice.
The S&P crossed above its 50-day MA on September 2, and has advanced about 9 percent.
On Monday this week, the equity index traded at its highest level since September 2008, up about 11 percent so far in 2010.
Some stocks, however, seem to have significantly deviated from their trading ranges, perhaps increasing the risk of a possible retracement in the markets.
Among the companies in the S&P 500 that are farthest away from their 50-day moving average,Tenet Healthcare, which shares soared last week after Community Health Systems offered to acquire THC for $3.3 billion, is at the top of the list.
MonsterWorldwide and American International Group are also among the leaders.
At the current levels, the S&P 500 is about 3 percent over its 50-day MA, while THC, MWW and AIG are 46, 31 and 19 percent, respectively.
While a bullish trend may not necessarily mean that a stock is overvalued, it could certainly serve as point of reference as per when investors may start taking profits off the table.
Here is a look at stocks in the S&P 500 trading farthest above their 50-day moving averages.
Data source: CNBC Analytics & Thomson Reuters
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