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With 2010 getting off to an even worse start than 2009 at this point in the year, it should come as little surprise that the current decline has been the sharpest since the S&P 500 bottomed in March 2009. One indicator we monitor on a daily basis and update each day in our Morning Lineup is the percentage of S&P 500 stocks that are oversold and overbought (stocks that are more than one standard deviation above or below their 50-day moving average). Currently, 305 stocks (61%) in the S&P 500 are oversold, while only 25 are overbought. As shown in the chart below, the percentage of oversold stocks in the S&P 500 (green line) is higher than it has been at any other time since the S&P 500 bounced off the lows in March 2009.

click to enlarge

With only 25 overbought stocks in the S&P 500, we looked to see what names currently make up the list in order to see what, if any, themes may be at play. The table below highlights each of these names along with the industry each one is classified under. As shown in the list, many of these companies (nine) come from industries which are in the Consumer Discretionary sector, so the market seems to be giving the consumer a lot more credit today than it was a year ago. But the most surprising aspect of the list has to be the homebuilders. As shown, three of the 25 stocks on the list are homebuilding stocks. Given that this sector was at the heart of the bear market in 2007, it says a lot about how different a market we are in now versus one year ago.

Source: Percentage of Oversold Stocks at Highest Level Since March 2009