For all the talk about shifting into cyclical stocks, the last three months has seen funds not earmarked for growth find their way into defensive sectors.

Last week Utilities was the strongest sector followed by Health Care, which is a hybrid sector buoyed by strong news for the pharmaceutical and biotech industries as more vaccine developments continue to drive demand. 

Meanwhile, growth names continue to ride the coattails of a handful of names and semiconductor stocks.

           

12-Month Trends

By the way, this is not just a recent phenomenon.  Save for the mad rush into cyclical names, when the ten-year yield spiked, the past 12 months hasn’t favored cyclical sectors.

Meanwhile, defensive stocks have put up gains that rival growth.

Right now, two approaches are working:

• Buy the Dip – focus on growth
• Cling to traditional Safety

Pros Confused

Not only have the professional strategists been wrong when they all advised loading up on cyclical/value, they are very confused about where the broad market is going.

According to Bloomberg there is a 24% gap between the top S&P 500 target for 2021, with 12 out of 24 analysts looking for a near term pullback.

Delta Variant

The Delta variant remains stubbornly in place, and this is stalling reopening efforts, bogging down supply chains and creating frustration.  This is why the Fed guessing game will make this week’s Jackson Hole meeting almost irrelevant.

Portfolio Approach

We are adding a new position in Consumer Discretionary today in our Hotline Model Portfolio.

Today’s Session

Stocks are poised to open higher with tech leading the way along with strength in health care on scuttlebutt Pfizer (PFE) will get full FDA approval for its Covid 19 vaccine.

Bank of America (BAC) just lowered its 3Q21 GDP estimate to 4.5% from 7.0%, but they say the demand comes back and they see 4Q21 growth at 6.0% and 1Q22 growth at 6.0%.

Comments

When you state that the PRO'S ARE CONFUSED does this mean that we who are members are one-up on the pros or are we part of the confusion. J M on 8/23/2021 10:46:53 AM

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