Overbought or Oversold

Posted by Bespoke Investment Croup

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 One-Year Trading Range Charts for the S&P 500 and Its Ten Sectors

Below we provide our one-year 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 between one standard deviation above and below the 50-day moving average (the white line).  The red zone represents between one and two standard deviations above the 50-day, while the green zone represents between one and two standard deviations below the 50-day.  Moves into or above the red zone are considered overbought, while moves into or below the green zone are considered oversold.

While the S&P 500 has pulled back more than 8% since its intraday high on October 27th, it’s still trading within its “normal” trading range.  To get to oversold, the index needs to fall another 2.11%.  For bears that are hoping for farther declines, there is still quite a bit of downside room to run before an oversold bounce would be expected.



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