Most of the rejection is over, the market’s durable bottom is still ahead By Investing.com

The market run from a week ago triggered some tactical buy signals, leading to a rally in the stock over the coming days, recouping the week’s losses.

However, strategists at BTG believe “most of the bounce has likely run its course,” advising investors to use the momentum toward the S&P 500 ( SPX ) 5400-5440 range to lighten exposure.

“In our view, a final sustainable low is likely still ahead of us,” strategists said in a Sunday note.

“We’re hard-pressed to find a 5%+ SPX decline that ended without seeing a large washout (less than 20% of components above 20 DMA). It only got to 31% last week, so unless it’s different this time, we should expect another leg lower to eliminate the width completely.”

BTIG also points out that market sentiment remains mixed, with put/call ratios returning to levels last seen in April, which is a positive sign. However, the NAAIM Exposure Index, which tracks the average stock market exposure of active investment managers, is still high, exceeding levels typically seen during market meltdowns.

Sectorally, consumer stocks continue to show overall weakness, while defensive stocks are consolidating near their highs.

BTIG maintains a favorable outlook on real estate investment trusts (REITs), noting their ability to hold at the breakout point, but views homebuilders as vulnerable as long as they remain below key resistance levels.

On the small-cap side, the investment bank notes that the iShares ETF (IWM) remains below the key $210 resistance level, advising caution until that level is recovered.

Meanwhile, gold looks well positioned for the next leg higher, with the GLD (NYSE: ) ETF consolidating as it tests the $225 level for the fifth time in recent months. “In our view, a breakout looks imminent,” strategists said.