Below is our trading range chart for the S&P 500. The white line represents its 50-day moving average, while the light blue shading represents between one standard deviation above and below the 50-day moving average. This light blue shading represents the index’s trading range. The red and green shadings represent between one and two standard deviations above and below the 50-day. The red area is “overbought” territory, while the green area is “oversold” territory.
As shown, the S&P has had a decent rally off the August 25th lows, but the move was so violent to the downside that it’s just barely out of oversold territory right now. As you can see, the index’s 50-day is clearly trending lower at this point, which is indicative of a down-trending market.
Below are trading range charts for the 10 S&P 500 sectors. As you can see, all ten remain below their 50-day moving averages. Consumer Discretionary is the closest to its 50-day, but it has yet to break above and back into its prior range. There are zero uptrending sectors at this point, and the onus is clearly on the bulls to turn things around.
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