It’s hard to believe, but even after yesterday’s rally, the S&P 500 and each of its sectors are still oversold.  The S&P 500 is also still lower now than it was a week and a half ago, but that’s another matter. 

To illustrate this, we have reproduced a chart from our popular Morning Lineup report, which is emailed out to Bespoke Premium subscribers each morning.  The chart summarizes where each sector is trading with respect to its historical trading range.  The circles represent where the sectors and index currently stand, while the tail represents where it was one week ago.  When the circle is in the red zone, the sector or index is overbought (light red=overbought, dark red-extreme overbought).  Readings in the green zone indicate that the index or sector is oversold (light green=oversold, dark green = extreme oversold).

While yesterday’s rally brought the S&P 500 and all ten sectors out of extreme oversold territory (dark green), they all still remain oversold.  Before yesterday’s move can be considered anything more than an ‘oversold’ rally, we are going to need a few more days of similar action.