In our day to day research, we track hundreds of different market indicators related to breadth, technicals, fundamentals, sentiment, etc, but one of our favorite indicators to track is the percentage of overbought and oversold stocks in the S&P 500.  Following yesterday’s face-plant, more than three-quarters of the stocks in the S&P 500 finished the day more than one standard deviation below their 50-DMAs, taking out the previous high of 73% from earlier this month.  More importantly, though, the recent surge in the percentage of oversold stocks has now easily eclipsed the levels of ‘oversoldness’ we saw earlier this year.  In fact, the last time we saw this high a percentage of oversold stocks in the S&P 500 was in January 2016.  Simply put, these are levels you don’t see very often.

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