No Runaway Move Up for SPX Ahead of Election: BTIG By Investing.com

Investing.com — BTIG analysts do not foresee a major breakout to the upside for ( SPX ) ahead of the upcoming US election, despite bulls holding strong in the 5670-5700 area.

In a note on Monday, the firm pointed out that while recent volatility had led to a primary breakout, the index had “performed in place”.

“Given last week’s strong environmental data, the SPX has yet to make a new high,” noted BTIG, suggesting the market is unlikely to see a significant move higher ahead of Election Day.

While the chances of a potential market pullback in October remain, BTIG analysts pointed out that unless the index falls below 5670, it is difficult to be aggressively bearish.

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

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

In terms of individual stocks, BTIG singled out Meta Platforms (NASDAQ: ) as up in both absolute and relative terms, while Microsoft (NASDAQ: ) declined, hitting relative one-year lows.

Despite Microsoft’s struggles, BTIG said software stocks generally fared better, indicating the sector’s resilience.

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

“They continue to look vulnerable to us,” analysts commented, noting that homebuilders may struggle to sustain their recent performance as market conditions change.

Overall, BTIG expects the SPX to remain range-bound with no “runaway movement” ahead of the election, although they remain alert to any further volatility in October.