Below we highlight our trading range charts for the S&P 500 and its ten sectors. For each chart, the blue shading represents between one standard deviation above and below the 50-day moving average. The green shading represents between one and two standard deviations below the 50-day, while the red shading represents between one and two standard deviations above the 50-day. Moves into or below the green zone are considered oversold, while moves into or above the red zone are considered overbought.
Investors certainly haven't had to worry about an overbought market lately. Since trading in overbought territory for the entire first quarter and briefly in April, the S&P 500 hasn't been there since. And now the index is more than two standard deviations below its 50-day, which is only seen after experiencing quick sharp moves lower.
All sectors except Telecom and Utilities are currently trading at or below the bottom of their trading ranges. Cyclical sectors like Technology, Financials, Industrials and Energy have gotten crushed. These sectors have major work to do just to get back to a neutral stance.
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