Small and mid-caps have returned to oversold territory after moving up into neutral territory at the end of last week. Meanwhile, although further below their 50-DMAs than yesterday’s open, large caps are looking to hold firm in neutral territory.  The Micro-Cap ETF (IWC), Russell 2000 (IWM), and Core S&P Small-Cap ETF (IJR) are the only major index ETFs that are currently lower now than they were last week.  IJR, however, has a loss of only 1 bp.  Longer term trends have weakened across the board recently as only the ETFs tracking the S&P 500 (SPY, VOO, and IVV) all remain in uptrends.  All others have been trending sideways over the past six months while IWC is actually in a downtrend.

Looking at individual sectors, the overbought/oversold picture is a bit less consistent with an about equal split between oversold, neutral, and overbought. Energy (XLE) has begun to see some mean reversion recently.  Still the most oversold of the eleven sectors, XLE has worked off of more extreme levels from last week and has been one of the top-performing sector ETFs over the past five days rising 1.78%.  But XLE still remains in a longer-term downtrend and has only risen 1.44% so far in 2019.  The Materials sector (XLB) is a similar story. After reaching extreme oversold levels last week, it has begun to rally and is closing in on reentering a more normal trading range. While these two cyclical sectors have begun to rally, so too have the defensives.  Real Estate (XLRE) and Utilities (XLU) have been surging—both this week as well as this year as XLRE sits up over 30% YTD—with both seeing the best and second-best performance over the past five days which has brought them deeper into overbought territory.  XLU, in particular, is now over 3 standard deviations above its 50-day, which is basically off the chart in our Trend Analyzer below! Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

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