As we head into today’s close, the S&P 500 Index breached the “overbought” level of 70 on an intraday basis, according to its 14-day relative strength index.
This is a level not seen since August.
The last time we saw 25% of the market above an RSI of 70 was in February of 2018.
This 25% >70 number seems to be a reliable indicator of the market sentiment and resistance.
But investors who look just at sectors or individual names will be hard pressed to find a similar situation. At the sector level, only industrials, utilities and tech have a large component over a 14-day RSI of 70.
These three sectors are also the only three trading as an aggregate above a 70 RSI number.
As far as absolute, none of the GICS sectors are.
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