Our indicators are moving toward oversold, says Truist’s Keith Lerner
Summary
- Keith Lerner believes the bull market still "deserves the benefit of the doubt," but short-term risk/reward is mixed.
- Market indicators are moving toward oversold (AAII bears at 52%, elevated put/call ratios, selling in S&P 500 ETF), but there hasn't been a full "flush out."
- He notes the median S&P 500 stock is already down 16% from its 52-week high, and the index didn't enter this period from an extended position.
- The recent pressure has "upends" the market broadening trade that many were leaning into.
- Defensive sectors like Consumer Staples are underperforming; this is partly because they had big run-ups earlier and now face concerns about their ability to push costs higher in a slowing economy.
- He expects the Fed to remain on hold, with Truist's house view still calling for two rate cuts by year-end, but acknowledges this depends on oil prices.
- He thinks the economy and markets can withstand a "wait and see" Fed, citing that companies have been "battle tested" through recent shocks.
- Tactically, he sees a potential buying opportunity ahead but believes the market likely has "a bit more to go" on the downside in the near term.
Trade Ideas
The speaker states market indicators are moving toward oversold (AAII bears 52%, high put/call ratios, ETF selling), but there hasn't been a full "flush out." He thinks the bull market deserves the benefit of the doubt, but short-term risk/reward is mixed and the market likely has "a bit more to go." The setup suggests a nearing buying opportunity, but the absence of a capitulation event implies further near-term pressure is probable before a durable low is established. The market is not yet at a clear buy point but is approaching an oversold condition worth monitoring closely for an entry. A shock (e.g., sustained oil spike) could cause a deeper, disorderly decline rather than the orderly grind lower he describes.
The speaker states the market broadening trade has been "upended" by recent uncertainties (growth, Fed, oil). He says, "maybe Tech will eventually come back alive here, given some of the uncertainties," noting the group has repriced about 30% from its highs. As the short-term leadership from the broadening trade fades amid macro uncertainty, capital may rotate back toward large-cap Tech, which has already corrected significantly and offers relative clarity. Tech is identified as a potential area of leadership recovery once the current market pressures show signs of abating, making it a sector to watch for signs of a turn. If interest rates move significantly higher or growth fears intensify further, Tech's valuation could face renewed pressure, delaying its recovery.
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This CNBC video, published March 20, 2026, features Keith Lerner discussing SPY, XLK. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Keith Lerner · Tickers: SPY, XLK