Below is a table showing the trading ranges for the S&P 500 and its ten sectors. For each sector, the black dot shows where it's currently trading, while the end of the tail shows where it was a week ago at this time.
As shown, after trading in overbought territory one week ago, the S&P 500 is now only slightly above oversold territory. The last time it touched oversold levels a couple weeks ago, the index bounced nicely. Will the same happen again this time?
Four sectors are now oversold, while two are overbought. Materials is the most oversold at two standard deviations below its 50-day, while Energy, Industrials and Technology aren't far behind. Unfortunately, the only two sectors that are overbought are Telecom and Utilities -- two extremely defensive sectors. The one positive is that the two Consumer sectors are still trading above their 50-days. With many of the retailers reporting earnings over the next couple of weeks, consumer stocks will now take the spotlight. Will they be able to weather the earnings storm, or will they be the next to go?
