Industrials, Retail Now in Overbought Territory

After a nice rally off of the March 10th lows, below we highlight our trading range charts of the S&P 500 and its ten sectors. These gains finally put a dent in the short-term downtrend of the S&P 500. As shown in the first chart below, the index broke through the downtrend a couple of days ago, and it is now drifting on top of the new support line. There is still a longer-term downward trend channel in place, but we won't have to worry about breaking that anytime soon.

On a sector basis, a couple have moved to overbought territory (red shading). Industrials, Consumer Discretionary and Consumer Staples all moved into the red zone in recent days. In downward and sideways markets, these overbought levels are usually met with resistance. Looking at the long-term chart of Financials, even after the sharp rally off of the lows, the sector still remains in a downtrend. As shown in the charts, Health Care and Utilities failed to even move out of oversold territory during the recent rally.