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The S&P 500 is now as oversold as it has been since the spring when the euro crisis hit its peak. As shown below, the index is now more than two standard deviations (the bottom of the green shading) below its 50-day moving average.

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Remarkably, all ten sectors are now more than two standard deviations below their 50-days as well. That's extremely rare. Typically during market pullbacks, the defensive sectors like Utilities, Telecom, Health Care and Consumer Staples will hold up relatively well, but that hasn't been the case during this decline. Clearly the looming tax increases on dividends and capital gains in 2013 are causing investors to dump high yielding defensive stocks along with the cyclicals.

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