The Invesco S&P 500 Equal Weight ETF (RSP) continues to lag the SPY as the largest stocks in the market remain leadership. The fund has yet to test the highs from June and the OB / OS Indicator is moving lower in an overbought position. Tonight could be key for the equity market as we will hear earnings reports from GOOGL, AMZN, AAPL and FB. Should these large leaders move lower after their reports, there is scope for SPY to test the support zone in the $300 – $310 range in the days / weeks ahead.
Weak Value Stocks
The Fed’s comments yesterday were another datapoint in our view that economic growth remains scarce, which favors outperformance on the part of growth stocks. This week we screen for the stocks that could exhibit weakness in that environment. Starting with the “Value Stock” universe, we look for names that are Very Bearish or Bearish, Overbought, Below a Falling LT Trend Line with Weak Money Flow and Relative Strength.
The screen returned 41 that are likely to underperform the market in the weeks and months ahead.
*Note that screen is as of yesterday.