With the stock market rallying well over 6 percent this week (depending which stock index you track), it’s time for active investors to reassess their portfolio holdings.
Market cycles, price action, and technical indicators are flashing some short-term caution signals. With this in mind, I thought it would be a good idea to review 5 investing themes I’ve been following (for active investors):
1) Cyclicals have attempted to come to the rescue, but expect some fading with Financials, Industrials and Communication dropping off.
2) Treasury yield rally likely rolls over in November. It is difficult to make much of bond yields bouncing.
3) A US Dollar Index rally should be forthcoming and will be important to watch for evidence that this causes any trading breakdowns in the Emerging Markets space versus Developed Markets.
4) Market breadth has rebounded to test all-time highs in Advance/Decline but has been uneven into and out of the election.
5) A cyclical stock market peak happened in early September and then mid-October (briefly). While a rally out of pre-election lows is ongoing, rallies should be sold for a pullback into December (in my opinion).
Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.