We are constantly monitoring a variety of quantitative and proprietary tools to get the best pulse we can on markets. One of our most robust tools, our Earnings Revision Model, is suggesting that investors who are focused on time horizons beyond six months should remain bullish.

While there may be some choppiness in the 1Q2021-2Q2021, we expect that it will be in the normal range of healthy pullbacks that occur in the midst of ongoing bull market; a decline of 5%-7%. Currently, we believe this pullback will be too short and too shallow to measurably effect the mainly bullish catalysts that should push equity prices significantly higher by year-end. Upcoming weakness should thus be used to ‘buy the dip’ on strong names.

One thing we also have been detecting from our work is that revisions are becoming more favorable down the cap scale, meaning that we are seeing signs that suggest tilting exposure toward Small/Mid Cap names from Large Cap.

We are obviously continuing our recommendation to be overweight Value/Cyclicals. However, our proprietary research on the Secular Growth/FAANG names continues to be largely constructive. While some in the financial media have compared the run-up in these names to the 2000 Internet Bubble, we do not find evidence of this in our work...

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