The third quarter was a rough one for all but one S&P 500 sector: Utilities.
This safe-haven sector ended the quarter in the green, while all other S&P sectors fell. However, one technician sees some previous leaders making a comeback in the fourth quarter.
Ari Wald, head of technical analysis at Oppenheimer, said the consumer discretionary ETF (XLY) is still making relative highs, which is a good sign for the sector.
As the ETF tests August lows, Wald said this could be a good entry point for buyers.
"It's got some good relative momentum behind it, and seasonals are in its favor, as well. Going back to 1990, consumer discretionary has been the second-best performing sector in the S&P for the fourth quarter," Wald said Thursday on CNBC's "Power Lunch."
Wald also is bullish on the consumer staples sector, which seasonally has been the best performing sector during the fourth quarter, he said.
Alternatively, Larry McDonald of Societe Generale is focused on the energy sector, which he said could benefit from a boost in commodities and monetary action from the Federal Reserve.
"You have to ask yourself, 'Is all this negative global economic activity coming back to the U.S., and could that do something to Fed policy?' If that happens, the commodity space will be the big, big winner in the fourth quarter and the first quarter of next year," said McDonald, as he believes a consequent Fed decision to keep interest rates unchanged would hurt the dollar and thus help battered commodities.
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