As the S&P 500 attempts to rebound today, Friday’s decline capped off a negative week for the market taking the S&P 500 out of short-term overbought levels. That decline ended a streak of more than six weeks (32 trading days) of the S&P 500 closing more than one standard deviation above its 50-day moving average.

While that sounds like an impressive streak of overbought readings, last summer, the S&P 500 was in the midst of a 44-day streak of overbought closes. After that streak, it experienced its first correction (10%+ decline) of the bull market that started in October 2022, and coming out of that correction, it had another streak of 33 overbought closes to close out 2023 and then quickly started another streak that lasted until early April when it ended at 53 trading days. As shown in the chart below, the most recent streak before the just-ended one was the longest in at least ten years.

Taking a longer-term look at streaks of overbought closes, the 53-day streak that ended in April ranked as the longest since April 1998. The chart below shows historical streaks of overbought closes for the S&P 500 since 1954 which was the first full-year of the five-day trading week in its current form. As shown, there have been many streaks of similar or longer duration. 85 streaks have lasted five or more weeks (25 trading days), and 65 lasted as long or longer than the current streak. The record for the longest streak was 94 trading days in April 1961. Think about that for a minute. 94 trading days works out to more than four months in which the S&P 500 rallied more than 18%.

As we described at the top, the just-ended streak of 32 straight overbought closes was the fourth streak in just over a year 371 days. While extended streaks of overbought closes may not be out of the ordinary, it’s very uncommon to see them in such proximity to each other. Since 1954 there has only been one other period where there were four streaks of at least 30 straight overbought readings in a shorter period (early 1960s) and one other period where there were as many streaks (2017 into early 2018).

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