If domestic GDP growth and PMIs are set to sequentially decelerate, should I be moving towards defensive areas at this time?
NO. The outperformance of Real Estate, Health Care, and Utilities and the underperformance of Energy, Industrials, and Materials are all NOT supported by my main sector tool, which normally has a strategic focus looking out 9-18 months.
Well, over the past two weeks, the cyclical/value sectors mentioned have performed much better while the defensive areas have lagged badly, with Real Estate being the lone exception.
My analysis suggests that there is still enough runway for Cyclicals/Value versus defense for nearly all investors, traders and strategic, to still have overweight positions relative to the defensive groups.