S&P 500 Index Closes At Record Heights, Reaches Most Overbought Conditions Since January 2020 – SPDR S&P 500 (ARCA:SPY), Materials Select Sector SPDR (ARCA:XLB)

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By Ronald Tech

S&P 500 Index Hits Record Highs Amidst Overbought Conditions

The Bull Run Continues: S&P 500 Index Sets New Record

A historic high was reached as the S&P 500 index closed at 5,171, with a 1% gain, reflecting bullish market sentiment.

This surge propelled the index into positive momentum for the week, potentially securing its 17th gain out of the last 19 weeks.

Since late October, the index, tracked by the SPDR S&P 500 ETF Trust (SPY), has surged over 25%, showcasing the robust uptrend in U.S. equities.

With 71% of S&P 500 stocks trading above their 50-day average and an impressive 74% surpassing the 200-day average, market breadth remains strong. The latter figure is nearing a peak not seen since January and the highest since October 2021.

A Shift in Sector Dynamics Drives Market Rally

This week, there was a notable deviation in market leadership as sectors other than technology took center stage.

The materials sector led the charge with a 2.8% increase, outperforming tech, which saw a 1.69% rise. Utilities, energy, and consumer staples also posted significant gains of 2.38%, 1.96%, and 1.73% respectively.

Sector This week’s performance
Materials Select Sector SPDR Fund XLB 2.63%
Utilities Select Sector SPDR Fund XLU 2.38%
Energy Select Sector SPDR Fund XLE 1.96%
Consumer Staples Select Sector SPDR Fund XLP 1.73%
Technology Select Sector SPDR Fund XLK 1.69%

Cautionary Signs of Overbought Conditions Arise

While the record-breaking streak of the S&P 500 is cause for celebration, technical indicators are flashing warning signals.

The Relative Strength Index (RSI) has surged to 77, a level unseen since January 2020, just before the onset of the global Covid-19 crisis. Elevated RSI levels are often interpreted as overbought, signaling a potential strain on the sustainability of the current rally.

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