No runaway move to the upside for SPX ahead of election: BTIG

Investing.com -- BTIG analysts do not foresee a major upside breakout for the S&P 500 (SPX) ahead of the upcoming U.S. election, despite bulls holding strong in the 5670-5700 zone.

In a note on Monday, the firm pointed out that while recent volatility led to a primary breakout, the index has been "running in place."

"Given the strong eco data last week, the SPX still couldn't make a new high.," BTIG noted, suggesting that the market is unlikely to see a significant move higher before election day.

While the odds for a potential market pullback in October remain, BTIG analysts emphasized that unless the index breaks below 5670, it's difficult to be aggressively bearish.

They note that small-cap stocks, which have benefitted from a 50 basis point rate cut and improving economic conditions, are performing better in absolute terms, but their relative performance is still lacking.

BTIG analysts said that this trend might change after October, with the potential for small-cap stocks to outperform later in the year.

In terms of individual stocks, BTIG highlighted Meta Platforms (NASDAQ:META ) as breaking out both in absolute and relative terms, while Microsoft (NASDAQ:MSFT ) has been weakening, hitting one-year relative lows.

Despite Microsoft's struggles, BTIG stated that software stocks overall have been faring better, indicating sector resilience.

The firm also pointed to weakness in homebuilders, whose relative strength peaked in mid-September.

"They continue to look vulnerable to us," the analysts commented, noting that homebuilders may struggle to sustain their recent performance as market conditions shift.

Overall, BTIG expects the SPX to remain range-bound with no "runaway move" before the election, though they remain watchful of any further volatility in October.

Source: Investing.com