How to respond to the seasonal headwinds in the US stock market? Oppenheimer highlights key support levels and the top 10 "selected stocks"

Oppenheimer analysts stated in their latest report that they maintain a cautiously optimistic but selective stock-picking attitude towards the current market. The firm pointed out that this four-year bull market that began in 2022 has exceeded historical averages in both magnitude and duration.

The analysts also cited historical data indicating that the period from May to September in election years typically performs weakly, which will bring seasonal headwinds to the market. Despite the intertwining bullish and bearish factors, Oppenheimer still believes the overall trend is slightly positive.

From a technical perspective, the S&P 500 index has fallen about 5% from its January peak and is currently approaching a key support level of 6600 points—this level coincides with the 200-day moving average. Notably, last Monday’s intra-day low of 6636 points was accompanied by the VIX fear index soaring to 35, and the firm is closely monitoring whether the index will test this level again or further dip into the 6490-6520 point range.

On a tactical level, Oppenheimer is assessing whether selling pressure is easing by monitoring changes in the VIX index—this would be a precursor to a technical rebound. Analysts are particularly focused on the emergence of a “bullish divergence” pattern: that is, when the index tests or sets a new low, but the VIX index shows relatively mild readings, this technical formation often signals a trend reversal.

However, Oppenheimer also cautiously reminded: “Considering the maturing cycle of this bull market and the upcoming seasonal headwinds, we will continue to maintain a selective holding strategy.”

Below are Oppenheimer’s preferred buy and sell targets for various sectors of the U.S. stock market:

Energy sector: Buy Valero Energy (VLO.US), Sell Enerflex (EFXT.US)

Materials sector: Buy Agnico Eagle Mines (AEM.US), Sell PPG Industries (PPG.US)

Industrials sector: Buy Johnson Controls (JCI.US), Sell Otis (OTIS.US)

Consumer Staples sector: Buy Costco (COST.US), Sell Mondelēz (MDLZ.US)

Healthcare sector: Buy Gilead Sciences (GILD.US), Sell Cigna (CI.US)

Financials sector: Buy Citigroup (C.US), Sell Aon (AON.US)

Real Estate Investment Trusts: Buy Digital Realty Trust (DLR.US), Sell SBA Communications (SBAC.US)

Technology sector: Buy Applied Materials (AMAT.US), Sell Fair Isaac (FICO.US)

Communication Services sector: Buy Google (GOOG.US), Sell Disney (DIS.US)

Utilities sector: Buy Entergy (ETR.US), Sell Constellation Energy (CEG.US)