In this week’s Roadmap:

• S&P 500 – A long and short-term technical perspective - Investors remain understandably concerned about equities for a variety of fundamental and technical reasons. With the S&P at the upper end of a 12-year trend channel, a pullback wouldn’t be surprising. However, with this week being another quarter-end end option expiration, and with short-term indicators becoming oversold, a rebound appears likely by the end of the week/early next week.
• US 10-year yields stalled for a third time at a key technical level at 1.37% raising concerns by some commentators that the cyclical rebound is failing. However, until US 10-year yields break below 1.22%, and more importantly, 1.126%, we would caution prejudging the implications of the recent pullback in yields. We would need to see a break below those levels to change our view that 10-year yields are in a bottoming pattern and likely to drift higher in Q4.

• Semiconductors, Hotels and Airlines - Mixed messages from investors regarding a cyclical recovery in Q4. The SOX Semiconductor index remains in a resilient 5+month trading range while the Hotel group is showing signs that investors are growing more confident about the economy reopening. The S&P 1500 Airline index, however, failed to hold key support and broke to the downside this week. While the breakdown may prove to be head fake, we would be remiss to ignore that negative price behavior. Our outlook remains unchanged and we continue to expect more cyclical groups to complete bottoming patterns through Q4.