Cyclical stocks have been outperforming the S&P 500, suggesting the market has hit a bottom, said Jim Paulsen, chief investment strategist at Leuthold.
Cyclical stocks, sensitive to economic changes, have performed "surprisingly well" after the August pullback.
"Unlike prior market declines this year, cyclical stocks have held up surprisingly well in the collapse that began in August."
The large-cap S&P 500 has dropped by roughly 21% this year, and the small-cap Russell 2000 index has underperformed it only by about 1%.
"Not only has the S&P 500 seemingly become more bear-resistant, but its underlying leadership indicates that a market bottom may have already been reached."