Oppenheimer technical analysts remain bullish on the U.S. stock market but acknowledge the risk that equities may correct lower in the near term.
“We reiterate the risk of a seasonal correction, and the longer term positives that indicate such a setback should prove an opportunity to purchase a bull cycle in its middle innings,” the analysts said in a client note.
They are closely watching the S&P 500 technical developments as history suggests the index may bottom in late August.
“We want to stress that the market is behaving in a manner consistent with a trend that should continue—specifically, a pullback in an uptrend, and not a major top,” the analysts added.
Oppenheimer analysts see the chance of a pullback extending to 4200-4400 and believe the S&P 500 “becomes increasingly attractive toward 4,300.”
“We’ll also be watching for a daily RSI reading below 40 as a tactical buy signal,” they concluded.
S&P 500 closed at 4478.03 on Friday.