What US sectors are overbought

Screening Filters

1. Region: United States

   • Purpose: Restrict the universe to U.S.-based stocks.
   • Rationale: Your question is specifically about US sectors, so we only want companies that are classified in the U.S. market. This ensures the sector picture we derive (e.g., Technology, Healthcare, Financials) truly reflects U.S. market conditions.

2. Exchange: XNYS, XNAS, XASE (NYSE, NASDAQ, AMEX)

   • Purpose: Focus on major U.S. exchanges.
   • Rationale: Most sector benchmarking and institutional analysis is built around large, primary exchanges. Limiting to NYSE, NASDAQ, and AMEX removes OTC and very illiquid venues that could distort the sector-level view with noisy or unreliable RSI signals.

3. RSI Category: overbought

   • Purpose: Select stocks whose momentum indicator (RSI) is in the “overbought” zone.
   • Rationale: “Overbought” is a technical term usually referring to RSI above a certain threshold (commonly >70). To answer which sectors are “currently overbought,” we first need to identify which stocks are overbought. Once we have that list, we can see which sectors those stocks belong to and judge which sectors are broadly overbought (i.e., many constituents in the overbought zone).

4. Market Cap: min 2,000,000,000 (≥ $2B)

   • Purpose: Filter out very small and micro-cap companies.
   • Rationale: Sector assessments are more meaningful when based on larger, more established companies that actually drive sector performance. Tiny stocks can have extreme RSI readings that don’t say much about the broader sector. A $2B floor keeps the focus on mid- and large-cap names whose overbought conditions better represent sector-level froth.

5. Price: min 5 (≥ $5 per share)

   • Purpose: Exclude very low-priced / penny-like stocks.
   • Rationale: Sub-$5 stocks often have higher volatility, lower liquidity, and can produce erratic RSI readings. By focusing on stocks ≥$5, the overbought signals are more reliable and less influenced by one-off spikes or thin trading.

6. Monthly Average Dollar Volume: min 500,000 (≥ $500K traded per month)

   • Purpose: Ensure minimum liquidity.
   • Rationale: Overbought readings on illiquid names are less trustworthy. A minimum dollar volume ensures that price moves (and thus RSI) reflect real market participation, making the aggregated sector signal more meaningful and tradable.

Why Results Match Your Question

• The RSI overbought filter directly captures what “overbought” means in technical-analysis terms, stock by stock.
• The U.S. region and major exchange filters ensure we’re only looking at U.S. equities, which are the basis for U.S. sector classifications.
• The market cap, price, and liquidity filters don’t come directly from your wording, but they refine the universe to larger, actively traded U.S. stocks, so that when we aggregate overbought names by sector, the result reflects where meaningful, broad-based overbought conditions exist—rather than noise from tiny or illiquid names.

In practice, we’d then group these overbought stocks by sector (e.g., using GICS or similar classifications) and identify which sectors have the highest concentration or weight of overbought stocks, answering which U.S. sectors appear currently overbought.