Below is an updated look at our trading range charts for the S&P 500 and its ten sectors. For each chart, the light blue shading represents the sector's "normal" trading range, which is one standard deviation above and below the 50-day moving average. The red zone is between one and two standard deviations above the 50-day, and moves into or above this area are considered overbought. The green zone is between one and two standard deviations below the 50-day, and moves into or below the green area are considered oversold.
As shown in the first chart below, the S&P 500 is now not only back above its 50-day, but it has also moved slightly into overbought territory. There's no cause for concern just yet, however, at least based on overbought/oversold measures. During strong uptrends like we saw for the first three months of the year, the S&P traded in the red zone for pretty much the entire time. It's when the index moves to the top of or above the red zone that you want to lighten up a little bit.
Moving on to the ten sectors, five are now in overbought territory, while none are currently oversold. Telecom and Utilities -- two defensive sectors -- are the most overbought, with both trading more than two standard deviations above their 50-days.
No sectors have quite yet made it back to bull market highs, but Consumer Discretionary and Consumer Staples are the closest.
As of Monday, it was looking like most sectors were about to break their uptrends, but the gains we've seen over the past three days have really done a lot to keep technicals in check. Unfortunately, Energy, Materials and Industrials have already broken their uptrends, so they've got the most work to do to get their houses back in order.
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