A rare Oversold moment for the S&P 500

During the Thursday May 19, 2022 trading day (which was last night for us in Asia/Pacific/Antipodes), the S&P 500 registered a new (weekly basis) Oversold reading.

This is only the 5th time in 20 years, where it has simultaneously traded to 2.5 standard deviations below its weekly mean and below a Relative Strength Index (RSI) reading of 30.

The S&P 500 (SPX) has now declined 19% from its early January 2022 peak.

This is moment for the S&P 500 has occurred soon after the Russell 2000 did something similar.

However some vigilance is required because the strength and momentum of the S&P 500’s current downtrend is rising and intact and unlike the Russell 2000 (albeit it’s not a rule and nor a prerequisite), the SPX’s 200 week moving average is still 8% below todays price, seen hovering around the 3,500 point level.

Incidentally, for the statistic nerds, the 20% decline seen in late 2018 was one of the more notable corrections which didn’t touch ‘Oversold’.

May 20, 2022

by Rob Zdravevski

rob@karriasset.com.au