S&P 500 Relative Strength Index Tracks Shift From Summer Momentum to Autumn Weakness

The Relative Strength Index (RSI), a momentum oscillator introduced in the late 1970s, is widely used by technical traders to gauge whether an asset has entered overbought or oversold territory. By comparing recent gains and losses over a set period, the indicator highlights potential reversals when readings move to extreme levels. A value above 70 typically suggests overbought conditions, while a level below 30 often signals possible buying opportunities.

Throughout 2025, the RSI on the S&P 500 captured several distinct shifts in market sentiment. The year opened with growing concerns about the global tariff landscape, but optimism returned after what some market participants called the “Liberation Day” rebound in early April. On that date, the RSI stood slightly above 21, indicating deep oversold conditions following weeks of selling pressure.

As companies reported that they were managing tariff-related costs more effectively than anticipated, equity prices recovered. The improving backdrop helped drive the S&P 500’s RSI into the high-60s by mid-May, just shy of the traditional overbought threshold. The positive risk mood remained intact through early summer, supported by stronger corporate earnings and broader enthusiasm for artificial-intelligence-related investments. By early July, the index’s RSI had climbed into the mid-70s, marking its highest point of the year and signaling that the market was potentially overextended on the upside.

For roughly three months—from mid-July through the first days of October—the RSI fluctuated within a relatively tight range between the mid-60s and mid-70s. Price action during this interval reflected continuing confidence in the durability of the economic expansion and in companies’ ability to weather trade frictions. Trading desks noted that each modest dip in the index drew quick buying interest, keeping momentum signals elevated.

Momentum Erodes as AI Optimism Fades

The tone began to change in early October as questions emerged about the sustainability of the artificial-intelligence trade that had supported valuations through the summer. Concerns that earnings growth might not keep pace with earlier projections sparked rotation out of high-momentum sectors. As buyers grew more selective, the S&P 500’s advance stalled and the RSI started a steady descent.

By 10 October 2025, the RSI had slipped into the upper-40s, neutral territory that neither confirmed a bearish reversal nor suggested an immediate rebound. Although a late-October rally briefly interrupted the downward trend, the indicator failed to regain its previous range. Selling pressure resumed in early November amid mixed economic data and lingering questions about the long-term earnings impact of elevated capital spending on AI infrastructure.

Across the first three weeks of November, the RSI continued to retreat. On 20 November 2025, it reached 34.9, its lowest reading since early April and only a few points above the commonly watched oversold threshold of 30. While the move did not guarantee a durable bottom, many technical analysts viewed the drop as a sign that the S&P 500’s momentum had shifted decisively in favor of sellers, at least in the short term.

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Technical Framework and Interpretation

The RSI’s contrarian nature means that extreme values often precede turning points rather than confirm existing trends. A high reading, such as those recorded in July, may warn of exhaustion after a prolonged rally. Conversely, a low reading, like the one seen in April or the sub-35 level in late November, can highlight possible accumulation zones. According to an overview of the indicator’s methodology, traders frequently combine RSI signals with support-and-resistance analysis to refine entry and exit decisions.

During 2025, each phase of the RSI’s movement corresponded to shifting narratives in the broader market. Early-year tariff concerns gave way to relief as companies adapted supply chains. Summer optimism centered on robust demand for AI applications and related hardware. By autumn, doubts about the pace of AI monetization undermined risk appetite, and the RSI’s slide reflected a market reassessing growth expectations.

Whether the November pullback marks the beginning of a deeper correction or merely a pause will likely depend on forthcoming data releases and guidance from firms with significant exposure to emerging technologies. Traders monitoring the S&P 500’s RSI will watch for a sustained break below 30 to suggest oversold conditions, or a rebound above 50 to indicate renewed momentum. Until either scenario unfolds, the indicator’s mid-30s position points to a market in search of fresh catalysts.

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