Overbought: 8 stocks ready to drop

Traders on the floor of the New York Stock Exchange.
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There's a group of stocks in the S&P 500 that have significantly moved away from their trading ranges and may be due for a drop as the market takes a pause or investors book profits.

Nearly two months after trading sideways, the S&P 500 is back on pace to reclaim a record. But as the market crawls higher, Goldman Sachs says U.S. stocks are the most overvalued they have been in 40 years, excluding the tech bubble.

"The length of the current rally without a correction has been exceeded only three times since 1930, during the 1960s, mid-1990s and late 2000s, raising investor concern that the market may be overdue for a correction in the near future," warned David Kostin, Goldman's chief U.S. equity strategist in a recent note to clients.

Similarly, Bespoke Investment Group highlighted this week that the recent move higher formed a short-term "flag" pattern, a technical indicator that could eventually result in a sharp move in either direction.