Stocks: Time for a Bounce?

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From Standard & Poor's Equity Research

Percentage of S&P 500 Subindustries with Negative 13-Week Ending Price Changes

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The 10 groups (which also contain component companies with 4 STARS (buy) or 5 STARS (strong buy) recommendations by S&P equity analysts) that have held up best since the October market high are listed below. Their strength during this overall market weakness may signal leadership potential in a recovery.

Source: Standard & Poor's Equity Research

So there you have it. Mark Arbeter, S&P's chief technical strategist, believes the S&P 500 is in the midst of an 8% to 12% decline from its recent high. In the meantime, there may be periods in which the S&P 500 experiences a counter-trend rally as a result of being oversold. We may be approaching such a rebound, in my opinion, since such a large percentage of subindustries in the S&P 500 have declined during the past 1-week and 13-week periods. Should we see a rebound, the leaders in this down-leg may also become the leaders during the recovery.

Industry Momentum List Update

Here is this week's list of the industries in the S&P 1500 with Relative Strength Rankings of 5 (price performances in the past 12 months among the top 10% of subindustries in the S&P 1500), along with a stock with the highest S&P STARS (tie goes to the highest market value).

Source: Standard & Poor's Equity Research

Stovall is chief investment strategist for Standard & Poor's Equity Research Services .