The chart below is from page two of our Morning Lineup report, which is available to all Bespoke Premium and Institutional clients. Today’s weakness in equities is sure to put some downward pressure on the percentage of overbought stocks, but in the wake of the big rally over the last six weeks, the net percentage of overbought (1+ standard deviation above 50-DMA) stocks in the S&P 500 surged above 75% earlier this week; the highest in over three years. In today’s Chart of the Day sent to all of our subscribers, we highlight the performance of the S&P 500 following other periods when the percentage of overbought stocks in the S&P 500reached similar levels as it did earlier this week.
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