As we discussed in today’s Chart of the Day, the S&P 500 went from oversold to extremely overbought in a very short span. The index’s largest sector by weight, Technology, did it’s fair share of work in that broader market rally as the sector surged double digits in the past week alone. As shown below, similar to the S&P 500, Tech was deeply oversold only one week ago, and the 11.4% rally since then brings it back to overbought. Unlike the broader market, this rally has not resulted in new highs, though.
As we first noted in last night’s Sector Snapshot, Tech’s rally off of its local low is astounding. The 11.4% run is currently the largest since the rebound from the Liberation Day lows last year and the COVID Crash lows before that. Before 2020, the only other times Tech rose by this much in one week were 2008 and throughout the Dot Com boom and bust years.
Perhaps even more impressive is that double-digit 5-day runs haven’t tended to occur so close to 52-week highs. Instead, they have usually occurred in the midst of major market downturns. As of today, the sector is within 4% of its high. By comparison, since 1990, when the index has experienced a 5-day rally of 10% or more, it was an average of 30% below a high. In fact, the only other times it has been within 10% of a high after a 10%+ five-day rally were multiple times in the period spanning the mid to late 1990s and into Q1 2000.
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.