A majority of stocks in the S&P 500 have stabilized and are starting to trend upward. This is a positive development for the overall market, especially amid Q4 seasonal strength. We continue to deploy cash into outperforming sectors such as consumer discretionary and industrial/materials. Also, small-cap stocks are improving relative to the overall market after a long period of flat performance.
Our short-term metrics show risk of a slight pullback in the S&P 500, although downside is limited, which supports an overweight to cyclicals into November. We are also monitoring macroeconomic conditions, which appear to be improving as financial conditions are highly accommodative.
Percentage of Stocks in Uptrend
Russell 2,000 Small-Cap Index vs. S&P 500