Robert Sluymer, a technical research analyst at RBC Capital Markets commented in a note on Wednesday that short-term indicators that track two- to four-week shifts peaked at overbought territory last week.
The analyst added that a pullback in the equity market over the coming weeks "appears likely" heading into the fourth quarter before a "more durable, investable, intermediate-term low" develops.
S&P Key Resistance Numbers
Sluymer noted the S&P has shown support at the 1925, 1911, 1900, 1867 levels and has met resistance at 2020, 2040/43, and 2070.
Of note, the S&P 500's October 2014 lows fall within the 1815-1820 levels.
Sluymer also pointed out the percentage of stocks trading above their 50 day moving average is beginning to rebound from "extremely oversold levels" and further supports a general market rebound in the fourth quarter.
Improving Relative Performers
Sluymer noted sectors that are showing improving relative performance include:
Financials:Diversified financials and exchanges are showing "accelerating" momentum.
Examples include:
- CBOE Holdings, Inc CBOE
- Msci Inc MSCI
- Nasdaq Inc NDAQ
Financials:
Select regional banks/thrifts are "rebuilding relative performance."
Examples include:
- Bank Of The Ozarks Inc OZRK
- Signature Bank SBNY
- Commerce Bancshares, Inc. CBSH
Staples:
Food products continue to "build upside leadership."
Examples include:
- Dean Foods Co DF
- Flowers Foods, Inc. FLO
- General Mills, Inc. GIS
Discretionary:
Restaurants leaderships is "intact."
Examples include:
- Starbucks Corporation SBUX
- Buffalo Wild Wings BWLD
- Affiliated Managers Group, Inc. AMG
- Franklin Resources, Inc. BEN
- Invesco Ltd. IVZ
- Dana Holding Corporation DAN
- BorgWarner Inc. BWA
- Leggett & Platt, Inc. LEG
- Triumph Group Inc TGI
- Esterline Technologies Corporation ESL
- Honeywell International Inc. HON
- Tidewater Inc. TDW
- ENSCO PLC ESV
- Denbury Resources Inc. DNR
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However, Panera Bread co PNRA and Cheesecake Factory Inc CAKE are beginning to "emerge."
Technology:
IT services such as Broadridge Financial Solutions, Inc. BR, along with Software providers like salesforce.com, inc. CRM are also showing leadership among technology firms.
Weakening Relative Performers
Financials:
Asset managers are showing "weakness," which is extending to new lows.
Examples include:
Discretionary:
Durables "remain under pressure" and are making new multi-week/month relative lows.
Examples include:
Industrial:
Ongoing "weakness" in machinery is showing its market in the industrial sector.
>Examples include:
Energy:
The list of new relative lows are "expanding again."
Examples include:
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