The chart below shows the S&P 500 50-day moving average (DMA) spread measured in standard deviations. When the line is in the red zones, the S&P 500 is considered to be overbought, while readings in the areas of green shading indicate that the S&P 500 is oversold. Finally, readings in the white zone are considered to be neutral. As shown, the S&P 500 is currently trading at overbought levels similar to where it was in late April and early August. While the S&P 500 saw sharp declines following both of those periods, overbought levels aren't an automatic precursor of an imminent decline. That being said, investors should be extra vigilant in the days ahead for any signs of weakness in the market's leading stocks.