The market has rebounded from the June lows and briefly
broke a bit higher above the 1700 mark of the S&P in early August.
The last few days have seen some mild pullbacks as the market seems to be
showing signs of getting tired. Whether we are about to get a correction
or not remains to be seen. August and September tend to be seasonally
weaker months and the market is up nearly 20% for the year at this point.
While some caution is warranted, any correction could be shallow and tricky to
time. The Fed has reined in its talk of ending QE early (although the
cat’s already out of the bag so to speak) and the economy looks like it could
be exiting the seasonal slow patch and strengthen a bit into year end. Recent
data such as the ISM Manufacturing Index and OECD CLI (Composite of Leading
Indicators) show economic growth firming. From this point on the market
will need economic growth that translates into profit growth to carry the
market higher as most of the gains attributable to P/E expansion have been
priced in. Earnings growth, it’s now your time to carry the load.
We are currently overweight
Financials, Healthcare and Technology and have some cash as protection in our
growth portfolios. On the conservative side we still favor short duration
corporate credit and continue to avoid any long duration fixed income and
government bonds. If the ten year bond breaks up toward three percent we
could see some good intermediate opportunities from oversold conditions on many
assets in the conservative space that we have been monitoring.
Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.