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posted on 04 September 2017

Market And Sector Analysis 02 September

Written by , Clarity Financial

Data Analysis Of The Market and Sectors For Traders

S&P 500 Tear Sheet

Performance Analysis

ETF Model Relative Performance Analysis

Sector & Market Analysis:

While a recovery effort was underway in Houston, the markets staged their own recovery this past week surging higher and breaking above both the current short-term downtrend and reclaiming the 50-dma. Let’s take a look at the sector breakdown.

Technology, Discretionary, Industrials, Materials, and Health Care were the best performers this week relative to the S&P 500 index as the “risk off" trade came out of Utilities and back into the “risk on" trade. Since these sectors are some of the largest weightings in the S&P, it propelled the market back onto a more bullish stance.

Financials, Utilities, and Staples were weaker on a relative basis but bullish trends remain intact for now.

Energy finally mustered a decent bounce in the sector, but the trends and backdrop remain sorely negative. Oil prices remain weak and there is little that suggests the damage is over yet. It is advised to continue using bounces in energy as a means to reduce exposure to the sector. We continue to remain out of the sector entirely.

Small and Mid-Cap stocks got a strong bounce this past week, but keep a watch on both these indices as the 50-dma poses resistance and have turned lower.

Emerging Markets and International Stocks continue to hold support and money has been chasing performance in these sectors as of late. Continue to hold positions for now.

Gold - FINALLY was able to break out of its trading range last week and its longer-term downtrend. With Gold once again very overbought, we will begin looking for an entry point on any weakness which does not reverse the recent breakout.

S&P Dividend Stocks, after adding some additional exposure recently we are holding our positions for now with stops moved up to recent lows. The index climbed back above its 50-dma and is reversing its oversold condition. We added to this position this past week.

Bonds and REIT’s continued to perform well last week as money rotated from “risk" into “safety." Holding current positions for now.

Sector Recommendations:

The table below shows thoughts on specific actions related to the current market environment.

(These are not recommendations or solicitations to take any action. This is for informational purposes only related to market extremes and contrarian positioning within portfolios. Use at your own risk and peril.)

Portfolio Update:

As noted above, the overall bullish trend remains positive which keeps our portfolios allocated toward equity risk. However, we continue to watch the deterioration of the primary supports of the market which remain concerning. But the trend remains the trend for now, and the recovery of the market above the 50-dma allowed us to allocate some capital in newer accounts to equity related risk.

We remain extremely vigilant of the risk that we are undertaking by chasing markets at such extended levels, but our job is to make money as opportunities present themselves. Importantly, stops have been raised to trailing support levels and we continue to look for ways to “de-risk" portfolios at this late stage of a bull market advance.

Again, we remain invested but are becoming highly concerned about the underlying risk.

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