What to watch

History suggests S&P set up for future gains

Weeks of lackluster trading could set up investors for something to look forward to.

Listless trading by the Standard & Poor’s 500 now means only a third of the sub-industry groups, or 33%, are trading over their average prices over the past 10 weeks, says Sam Stovall, chief equity strategist at CFRA. At first glance, the low participation by industries in the market’s upward move and the reliance on a few breakaway winners seems like a problem for the market.

But history suggests otherwise as the low percentage of companies trading over their average prices the past 10 weeks could set up for future gains. Over the past 20 years, when the percentage of sub-industries trading over the average prices the previous 10 weeks was 33% or lower, stocks wound up rising in the following three, six and nine weeks, Stovall found. Earlier in the month, 24% of sub-industries were trading above their average prices the previous 10 weeks.

Some sub-industries are showing strength: broadcasters such as Sinclair, construction materials firms such as Martin Marietta Materials, construction and engineering firms such as Fluor, distillers and vintners such as Constellation Brands, household appliances such as Whirpool, Internet software and services such as Alphabet and managed health care such as Aetna.

Much will be determined this week as 179 companies in the S&P 500, representing 38% of the index’ market value, report their quarterly profit results.