The S&P 500 is down nearly 2% since peaking out last Tuesday, and the index has moved back into neutral territory after trading overbought for a few days. Below we highlight where the ten S&P 500 sectors currently stand within their trading ranges. In the chart below, the black vertical neutral (N) line represents each sector's 50-day moving average. The red zones represent overbought territory, while the green zones represent oversold territory, which we calculate as one standard deviation above or below the 50-day moving average.
Last week at this time, five sectors were overbought, while just three remain overbought at the moment. Consumer Discretionary and Health Care are the two sectors that have moved out of overbought territory, and Health Care has even moved below its 50-day. Five other sectors are now below their 50-days as well. These include Consumer Staples, Energy, Technology, Telecom and Utilities. Consumer Staples has really taken a hit, and another down day will put it in oversold territory.
The three remaining overbought sectors are Financials, Materials and Industrials. These have been the clear leaders of the December rally, and without them things would look a whole lot worse.