Despite a rally in the back half of June, the month and the quarter were terrible, which ranks among one of the worst six-month starts of a year ever. There were a host of reasons behind the weakness in June, but chief among them were growing economic slowdown fears and the slow continuation of the analyst community lowering their forward profit expectations. This is in line with what I have been forecasting for several months now. Although, we will get to better markets and a high-quality entry point for equity investors, my work still suggests that our sweet spot to get aggressive is still on the horizon.

The month ended with a clear shift towards traditionally defensive areas with Health Care, Staples, Utilities, and Real Estate the top performing S&P 500 sectors. On the other side of the coin, more offensive and cyclical sectors were the big laggards — Consumer Discretionary, Financials, Materials, and Energy. My sector recommendations have been moving this way for the last several months, and my Energy downgrade in March now looks to be coming my way, which is common for my work to be on the earlier side more often than not.