Fundstrat technical strategist Robert Sluymer offered insight on the best way to play the stock market, which is especially timely as the Dow Jones Industrial Average surpassed 23,000 points for the first time ever Tuesday.
Sluymer said long-term cycle trends, momentum and performance relative to bonds remains positive for equities. In the medium-term, there's no evidence of a peak yet as indicators tracking the percentage of stocks with positive weekly momentum "continue to build to the upside."
In the short-term, though, indicators tracking two- to four-week shifts are overbought for larger-cap indexes and are beginning to show the early signs of a near-term peak for smaller-cap markets.
"As noted last week, the pullback in small-caps, along with Financials is an important litmus test for the rotation to value and reflation stocks," Sluymer wrote. "We expect pending pullbacks to hold, which is beginning to develop in larger-cap Diversified Banks."
- Technology: "Leaders (Texas Instruments Inc. (TXN) and Visa Inc. (V) ), now well advanced and less timely vs. emerging ideas (Apple Inc. (AAPL) , Integrated Device Technology Inc. (IDTI) )"
- Staples: "Monster Beverage Corp. (MNST) leading/accelerating while The Hershey Co. (HSY) bottoms at its 200-dma. Contrarian idea: Conagra Brands Inc. (CAG) at its 4-year ma."
- Discretionary: "Tiffany & Co. (TIF) , Madison Square Garden Co. (MSG) and Texas Roadhouse Inc. (TXRH) timely longs within broad consolidations: (-) TJX Companies Inc. (TJX) falling at 200-dma."
- Financials: "Despite the yield curve weakness, larger-cap Diversified Financials are timely: JPMorgan Chase & Co. (JPM) , Bank of America Corp. (BAC) , Goldman Sachs Group Inc. (GS) "
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