S&P 500 Flashes a Signal Never Seen in 36 Years. What’s Next?

On Nov. 2, the S&P 500 closed more than two standard deviations below its 50-day moving average—a measure of how far prices have fallen from their recent trend—entering extreme oversold territory even though 46.8% of its constituent stocks were overbought. Since 1990, five similar situations have occurred, and the overbought share never exceeded 33.4%. Because the S&P 500 gives larger companies more influence, declines in Nvidia, Alphabet and Meta can drag the index lower even while many other stocks rise. In October, the regular S&P 500 fell 0.9% while its equal-weighted counterpart gained 5%, a 5.9-percentage-point gap, as nine of 11 sectors advanced and investors questioned returns on massive AI spending.