S&P 500 and Sector Six-Month Trading Range Charts

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 |  Includes: IVV, IYC, IYE, IYF, IYH, IYJ, IYK, IYM, IYW, IYZ, SPY, VOO, VPU, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY
by: Bespoke Investment Group

lt's pretty hard to believe, but it's already been nearly six months since the equity market made its bull market peak on April 23rd. Below we highlight six-month trading range charts for the S&P 500 and its ten sectors. In each chart, the blue shading represents the sector's "normal" trading range, which is 1 standard deviation above and below the 50-day moving average. The red zone represents between 1 and 2 standard deviations above the 50-day, and moves into or above the red zone are considered overbought. The opposite applies to the green zone, and moves into or below this area are considered oversold.

As shown, the S&P 500 is just about in the middle of its red zone at the moment. The index has been trading into overbought territory for some time now, which is common during long-term up-trends. Moves to the top of the red zone have generally marked short-term peaks in moves higher for the index, so investors should be on the lookout for this.

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Of the ten sectors, three are above the levels they were at when the overall market peaked back in April, and they're all defensives -- Consumer Staples, Utilities, and Telecom. The Materials sector is getting very close to its prior bull market highs as well, however. As we also noted in our last post, the Financial sector has been a clear laggard recently, and it's still the farthest away from its April highs of any sector. The Financial and Telecom sectors are the only ones currently not trading into overbought territory at the moment. Energy, Materials, and Consumer Discretionary are the most overbought. (To check up on sector overbought/oversold levels on a regular basis, subscribe to Bespoke Premium today.)

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