Oppenheimer Technical Analysts See Continued Rally In S&P 500; Recommend 3M And General Electric

Oppenheimer's technical analysts see a continued rally in the S&P 500 and suggest buying stocks in capital goods and semis/semi equipment sectors.

The brokerage said the upper end of the index's trend channel points to 2,250 at year's end, and it sees the recent breakout at 2135 as an attractive entry point.

"In our view, the S&P's breakout is confirming the next leg of the advance meaning that rallies should be of both greater magnitude and duration than the bouts of strength exhibited during the prior 24-month trading range, and pullbacks should be shallower and shorter lived," analyst Ari H. Wald wrote in a note.

"In our view, the next opportunity is to buy the first pullback, not try to time it," Wald continued.

Despite headwinds in the form of leadership, interest rates and August/September seasonals, the analyst still recommends overweight exposure to U.S. stocks based on:

1. "The completion of our cyclical correction road map"
2. "Broadening internal breadth"
3. "Narrowing credit spreads"
4. "Stabilized commodity prices"
5. "A sentiment backdrop that is not yet at the extreme side of optimism"

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Following the typical Fed-hike trajectory, the analyst expects the S&P's advance to continue into the second quarter of 2017.

Recommendations

On the semiconductor front, Wald recommends Texas Instruments Incorporated TXN, Lam Research Corporation LRCX and Monolithic Power Systems, Inc. MPWR.

In the capital goods sector, Oppenheimer's favorites are General Electric Company GE, 3M Co MMM and Mueller Water Products, Inc. MWA.

At Time Of Writing...

• Texas Instruments was seen up 0.56 percent to $65.21.
• Lam Research, up 0.64 percent to $89.12.
• Monolithic Power, down slightly 0.10 percent to $70.85.
• GE, almost flat at $32.87.
• 3M, down 0.22 percent to $181.00.
• Mueller Water, down 1.54 percent to $11.49.

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