<div id="readability-page-1">Investing.com - One technical signal in the S&amp;P 500 is flashing warning signs for stocks, with historical data pointing to a possible significant pullback ahead, according to BTIG. The SPDR S&amp;P 500 ETF Trust (NYSE:SPY) on Thursday registered a daily Relative Strength Index (RSI) reading of 78, a level indicating overbought conditions. The following day, SPY fell 1.2%. [[pro_promotion | Get premium market insights on InvestingPro, save up to 50% ]] BTIG technical strategist Jonathan Krinsky notes that since 2023, there have been only six instances where the SPY ETF has lost more than 1% after the RSI exceeded 75. RSI is a momentum indicator that measures how overbought or oversold a security is on a scale of 0 to 100, with readings above 70 generally considered overbought. In five of those six instances, SPY suffered a peak-to-trough decline of at least 7% in the weeks that followed, Krinsky said. The lone exception, in 2023, saw the market trade sideways before resuming its uptrend. Average returns were negative across every timeframe from 5 to 40 days. The RSI signal arrived alongside a broader deterioration in market internals that Krinsky said had been building for weeks. Friday’s session brought the first meaningful crack in the semiconductor and AI trade, with the VanEck Semiconductor ETF (NASDAQ:SMH) posting its worst single-day performance since March, falling 3.8%. Despite some rotation into software names, breadth was broadly weak, with 70% of NYSE volume concentrated in declining stocks, the highest such reading since March. &#34;This is consistent with our view that semis/AI are likely to ‘catch down’ to the rest of the market as opposed to the other way around,&#34; Krinsky said. Adding to the concerns is an unprecedented divergence in index breadth. The S&amp;P 500 on Thursday sat 8.5% above its 50-day moving average while only 47% of its member stocks traded above their own 50-day averages, marking &#34;by far the widest divergence on record,&#34; according to Krinsky. Furthermore, the 30-year Treasury yield has climbed back above 5% and is threatening to break above its 2023 cycle peak of around 5.17%. While the S&amp;P 500 index itself has largely shrugged off rising rates, the average stock has not, with 9% of S&amp;P 500 members hitting 52-week lows as recently as last Wednesday. Krinsky warned that a sustained move to a higher trading range for long-dated yields &#34;would likely finally be a headwind for even the tech/AI names that have remained immune thus far.&#34; Tech concentration is another reason for caution, as the S&amp;P 500 technology sector’s weighting has surged to a fresh record of 37.5%, surpassing its peak during the dot-com bubble.</div>

.SPX

SPXU

A technical signal in the S&P 500 indicates a potential pullback, with the SPDR S&P 500 ETF Trust (SPY) showing an overbought RSI of 78. Historically, such conditions have led to declines of at least 7% in most cases. Market internals are weakening, particularly in the semiconductor sector, and rising Treasury yields may pose further risks. The S&P 500's tech sector weighting has reached a record high, raising concerns about market sustainability.

- A technical signal in the S&P 500 indicates a potential for a significant pullback, as the SPDR S&P 500 ETF Trust reached an overbought RSI of 78, leading to a 1.2% drop the following day.  
- Historical analysis shows that after similar RSI readings, SPY typically experienced declines of at least 7% in the weeks that followed, with market internals showing deterioration and a notable drop in the semiconductor sector.  
- Additionally, there is a concerning divergence in index breadth and rising Treasury yields, suggesting potential headwinds for the tech sector, which has reached a record weighting in the S&P 500.

History suggests S&P 500 drops at least 7% when this happens