By Teresa Rivas

From Iran to international trade, there has been no shortage of geopolitical worries weighing on the market, even as concerns about artificial intelligence continue to pressure parts of the tech sector. Yet rather than pulling money out of equities altogether, investors appear to be rotating within the market -- leaving pockets of opportunity.

Last week was fairly typical of recent trading, with the S&P 500 edging lower, in no small part due to tech stocks that are heavily weighted in the index. Roth Chief Market Technician JC O'Hara expects major indexes will continue to "trend sideways and neutral in our view." At the same time, he says, market breadth continues to advocate for involvement in stocks.

To wit, the equal-weighted version of the S&P 500 gained ground last week, as most stocks rose. That shows there are "several areas of the market which house healthy," O'Hara writes. "While the market continues to focus on the 'compliment or kill' nature of AI, we find plenty of strong picks that may be going under the radar."

That includes even in out-of-favor sectors. Roth is underweight the consumer discretionary sector, but O'Hara notes there may be an opportunity to buy following the recent weakness in Starbucks and Amazon.com.

The latter has held its ground when it hit its lows from May 2025 and has started to rebound. However, Amazon's recent selloff shows again how it's worth looking under the hood of recent stock moves: The equal-weighted large-cap discretionary sector is actually up more than 3% this year, easily outpacing the S&P 500's less than 1% rise -- a reminder not to "simply dismiss the entire index but rather look for momentum stocks in a struggling area of the market," he writes.

Health care as a whole outperformed the index last week, and O'Hara thinks that's likely to continue. As for specific stocks, he highlights AbbVie, Cencora, DaVita, Eli Lilly, Medtronic, Moderna, and Pfizer as stocks with the strongest technical setups.

Elsewhere, Waste Management and Republic services are his favorites in the industrial sector, along with the aerospace and defense names including Cadre Holdings, Leonardo DRS, General Dynamics, and V2X.

Finally, the materials sector has been one of the strongest this year, and chemical companies are particularly well positioned, O'Hara writes, citing Avery Dennison, Dow, International Flavors & Fragrances, and LyondellBasell as top picks.

By contrast, he doesn't think it's time to sound the all-clear on banks, as long-term charts suggest there could be some more downside before the stocks find support.

Ultimately, O'Hara sees the S&P 500 in rangebound territory -- "not a negative, rather a neutral." Still, investors don't have to settle for neutral when there are stocks under the surface that haven't been caught up in recent worries.

Write to Teresa Rivas at teresa.rivas@barrons.com

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March 02, 2026 13:13 ET (18:13 GMT)

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