Portfolio Perspective: Technical Factors Suggest A Long Overdue Correction for U.S. Equities
— John Kosar, Asbury Research
Despite unmet upside targets 3 percent to 7 percent above the market in the market-leading NASDAQ 100 and Russell 2000 Indexes, many key near-term metrics warn of the US stock market’s vulnerability to beginning a long-overdue correction this quarter. Among the most underinvested U.S. market sectors are, in order and according to our own asset flow-based metric, basic materials, utilities and Energy. The most overinvested are consumer discretionary, health care and industrials. We view the underinvested sectors as places to find value and opportunity one to two quarters out, and the overinvested ones as an opportunity to protect open trade profits.
John Kosar is the director of research at Schaumburg, Illinois–based financial information services provider Asbury Research.
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