The End Of Overbought?

Equities are turning lower to end the week, putting the S&P 500 (SPY) on pace to end a nine-week winning streak. The 2.25% decline as of this writing today also puts the index on pace to close within one standard deviation of its 50-DMA (neutral territory) for the first time since April 13th. Likewise, the Tech sector (XLK) that has fueled much of the recent rally is pulling back sharply, eying a 5% decline on the session, to also end its streak of overbought readings.

Tech has been overbought for 38 sessions in a row through yesterday's close. Assuming today's decline holds and the sector closes within one standard deviation of the 50-DMA, it would be the longest streak of overbought readings since July 31, 2025 when it had spent 56 sessions in a row in overbought territory. For the S&P 500, the aforementioned streak of elevated closes is now the longest since April 2024.

For the broad S&P 500, Friday's decline is the largest single day drop since October 10, 2025 and for Tech, it's been even longer since we have seen such a large decline.  The sector is one pace to close with the largest daily decline since April 4, 2025.

However, today's decline is in the context of a few days of weakness. Tech peaked on Tuesday, and at the moment it is down over 8% versus that high. As shown below, that is the largest three day decline since the tariff fueled sell-off in the spring of last year.  For all days since sector data beings in late 1989, the three-day drop ranks in the first percentile of all periods.