The recent runup in stocks could be masking a worrisome development for the market, Wolfe Research said. The technical setup for stocks is exhibiting some troubling signals beneath the surface even after the recent rally suggested a return to risk-on sentiment on Wall Street, according to the firm's managing director Rob Ginsberg. On Tuesday, the S & P 500 had snapped an eight-day win streak .
"Despite the violent rally from a couple of weeks ago, the market continues to provide a more cautious tone beneath the surface," Ginsberg wrote in a Tuesday note. .SPX 5D mountain S & P 500 The technician pointed to the recent defensive tilt in equities as an example, with sector leadership in the S & P 500 helmed by health care, consumer staples, utilities and real estate.
In fact, on Wednesday, consumer staples stocks hit an all-time high, boosted by an advance in Target , which was up on an earnings beat . Other worrying signs are emerging, with the 10-year Treasury yield falling back below 3.8%, and U.
S. crude oil futures dipping below $75 per barrel. "Add to the mix the action of yields (10-year yields, our cover chart, were down another 6 bps today and look poised for another leg lower) and oil, and apologies for not getting all bulled up following this sharp upward move of the past couple of weeks," Ginsberg said.
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