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Investors remain understandably cautious heading into 2H20 following the unprecedented volatility seen. Equity markets are likely to remain choppy in Q3, but the longer-term cycle backdrop remains supportive of higher equity levels and we continue to caution clients from becoming overly defensive.

I favor a balanced portfolio of both secular and cyclical growth with cyclicals as timely. Equity markets in general, and cyclicals specifically, are showing evidence of bottoming short term at important technical support, most near rising 50-and/or 200-dma’s.

There is early evidence of relative performance improving, following pullbacks through June. Among stocks showing such moves are: Airlines (JBLU, ALK); Industrials (CMI, PCAR); Rails (KSU, CSX); Homebuilders (DHI, LEN), Retail (BBY, DLTR); Cruise lines (CCL, RCL); Chemicals (LYB, LIN); Electrical Components: (APH, TEL); Semis (MCHP, TXN, XLNX, MU): Communication Equipment(CSCO, LITE).

I continue to expect the leadership to ebb and flow between secular growth and cyclical growth through Q3 into YE/2021 with cyclicals incrementally carving out longer-term bottoming profiles. I see the recent pullback in more cyclical stocks to be a timely entry point to increase exposure.

Daily Momentum oversold, bottoming as JBLU pul...

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