The S&P 500 ended the month of June with its fifth consecutive monthly gain and the index has now been up seven of the last eight months, which is quite impressive considering it has been battling several macro worries since the end of 1Q21. Our key indicators remain quite supportive for the U.S. equity markets and are still showing clear signs about what areas of the S&P 500 should be deemphasized and avoided. Hence, we are still advocating that investors stay the course and remain steadfast regarding about what is to come — the national reopening of the domestic economy and the continuation of the corporate profit recovery that we have been discussing for several quarters.

When the year started, we laid out our thesis that the early parts of 2021 were going to be bumpy despite our research suggesting that the U.S. equity market would be moving higher. Despite the over 14% price appreciation in the S&P 500, there have been many speed bumps to deal with even for the most experienced professional investors. When the environment gets tricky how does one deal with challenges that Mr. Market has created? We once again would restate the view that a disciplined process driven approach should add considerable value to investors by helping them avoid being excessively impacted by the near constant noise from news headlines and the potential emotional responses that are the direct result of day-to-day volatility.

Notably, our proprietary methodology is still signaling that investors should keep a medium-term view and focus their attention on the bigger picture that should keep backing the U.S. equity markets for at least the remainder of the year. The probable tailwinds are the powerful blend of accommodative Fed policy, the reopening of the U.S. and global economies, and a major corporate profit recovery that is driving considerable strength in our proprietary earnings revisions metrics. As a result, the conclusions obtained from our investment process and our most essential indicators is for investors to stay constructive, and view tactical pullbacks and volatility as buying opportunities.

We at FSI continue to hold the view that active management of portfolios can beat passive strategies over time if one employs a disciplined and data-driven approach to investing. Our research suggests that this is no easy task, but it is clearly obtainable. However, it does take self-discipline and perseverance.