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.