Key Takeaway

Stocks continue to slide as the market enters a seasonally volatile period. Historically, October tends to produce choppy trading conditions ahead of a seasonally strong November. Therefore, we are raising cash across portfolios, with a slight overweight to energy, financials, and consumer discretionary, which show continued upside potential relative to the overall market. This is consistent with our rotation to value over growth stocks this quarter. 

Over the short-term, upside appears to be limited as the S&P 500 broke below the 50-day moving average last week. Initial support is seen around $4,000-$4,200, although our indicators have shifted to risk-off mode. 

CBOE Volatility Index (VIX)