The CBOE Volatility Index (VIX) made a series of lower highs over the past year, supporting the market’s rise to all-time highs. Lower volatility (VIX below 20) is a positive sign for risk-on positioning, although we are monitoring nearby support which can lead to choppy trading conditions this month.
For now, S&P 500 pullbacks appear to be supported above the 50-day moving average, currently around $4,400. We are positioned for a pickup in cyclical strength towards the end of the year, which could favor value stocks over growth stocks. Relative strength has been particularly strong in healthcare/biotech, while small-caps improved over the past week.