In spite of a relatively decent earnings season, mixed economic readings, domestic political turmoil and an emerging sell-the-news mentality left cracks in the foundation of the ten-month old bear market recovery. This January, the S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices finished down across the board by -3.70% , -3.46% and -6.41%, respectively.

Although the VIX (implied options volatility) set new post-crash lows, it likewise spiked heavily in the month's fourth week when General Electric (GE) missed earnings expectations and strong opposition was indicated for Federal Reserve Board Chairman Bernanke's renomination.

A nervous market nevertheless finished nearly flat with the S&P 500 (SPY) lower for a fourth consecutive week by just -0.7% and the NASDAQ 100 (QQQQ) higher by +0.4%. However, at one point before Friday's last hour rebound, the VIX had run up +30% from earlier in the week and the S&P 500 had tagged its 200-day exponential moving average for a near "official" correction of -9.2% off its January highs. This action had the Market Rewind ETF rotation models seeking safety for the first time since the 2009 March lows.

(Click Image to Enlarge/ ETF Rewind Glossary)

The chart below provides a quick snapshot of where the S&P 500 and its ten sectors are currently trading relative to their normal trading ranges. The light green shading represents between one and two standard deviations below the 50-day moving average and is the first "oversold" level. The dark green shading represents between two and three standard deviations below the 50-day. Moves into the dark green shading are considered extremely oversold. The dot is where the sector is currently trading, while the end of the tail is where the sector was trading one week ago.

With this chart, you can easily tell where the sector is now and which direction it has been moving. After Thursday, the S&P 500, consumer staples, energy, financials, telecom, technology, and utilities are all in extreme oversold territory.