Market, Most Sectors Overbought for First Time Since October

Below we highlight our trading range charts of the S&P 500 and its ten sectors. The red zone is between one and two standard deviations above the sector's 50-day moving average and vice versa for the green zone. When the price moves into or above the red zone, it is considered overbought.

For the first time since last October, the S&P 500 has moved into overbought territory. Industrials, Tech, Energy, Staples, Materials, Utilities and Telecom have all moved into overbought territory as well. Financials and Health Care are the only two sectors that still have a ways to go to get there. While this might suggest a short-term pullback is in the cards (much like breadth readings), it bodes well for the underlying strength of the market, which has now staged a clear breakout of its downtrend.

Comments

[CatDaddy:]

I enjoy your statistical analysis very much. Thanks for your efforts and contributions.

I use this methodolgy fairly successfully both on the long and short side.

Any comments on the sensitivity/ performance of the method to the length of the moving average used to compute the means and the Std Dev's

2008 Apr 06 03:22 PM

[Leonard:]

Ditto on CatDaddy's ???
Thank you.

2008 Apr 07 11:12 AM

[robert99:]

Thirded - Articles with nothing but good, helpful data and no bias one way or the other are both refreshing and extremely helpful.

2008 Apr 07 01:37 PM