Overbought: 8 stocks ready to drop

Traders on the floor of the New York Stock Exchange.
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Traders on the floor of the New York Stock Exchange.

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.