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posted on 18 September 2017

Market And Sector Analysis 17 September 2017

Written by , Clarity Financial

Data Analysis Of The Market and Sectors For Traders


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S&P 500 Tear Sheet


Performance Analysis


ETF Model Relative Performance Analysis


Sector & Market Analysis:

Let’s take a look at the sector breakdown.

ALL SECTORS - improved this past week with each regaining above the 50-dma. This reduces some of the short-term negative pressure on the market. See recommendation analysis below for specific actions.

Energy, as noted over the last two weeks, has mustered a decent bounce 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 bounced last week, regaining their 50-dma and pulling more of the recent negative pressure off of the markets. With both indices back to overbought look to take profits at any failure of new highs.

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 but profit taking and rebalancing remains advisable.

Gold - As noted two weeks ago, Gold was able to break out of its trading range 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. Gold did weaken a bit this week as money rotated from safety to risk, with overbought conditions still present, remain patient for now.

S&P Dividend Stocks, after adding some additional exposure recently the index broke out to new highs. We are holding our positions for now with stops moved up to recent lows.

Bonds and REIT’s finally had some profit taking hit these positions last week on the “risk" rotation. As stated last week:

“REIT’s are looking to break out of a long consolidation cycle and bonds remain favorable. Continue holding current positions for now but we are looking to take some profits and rebalance holdings."

We did take profits in bonds and are looking for the next opportunity to add more exposure on a further pullback that does not violate bullish trends.

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. We remain cautious of potential corrections giving the length of time the markets have been absent one. However, the trend remains the trend for now, and the recent 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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