With each passing week, the technical backdrop continues to support increasing equity exposure to cyclicals.

Secular growth pulls back after surging through Q2 into late Q3 - Technology and momentum stocks are pulling back with a growing number of leaders breaking below their rising 50-day moving averages. Just a few high-profile examples include AAPL, MSFT, AMZN, NFLX, FB, GOOGL, ADBE and PYPL. My view remains unchanged regarding these secular growth leaders. I see their weakness as a normal, intermediate term correction in what continues to look like a longer-term bull market.

AMZN, NFLX and FB are just three examples of secular growth stocks than only emerged from this 18-month trading range in Q2-Q3 of this year. Overall, secular growth stocks have had an impressive surge from their March lows pushing multi-month/weekly momentum indicators into overbought territory through the summer and into September.

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What I find noteworthy is that while the price for many of the secular growth leaders peaked in September, their relative performance highs versus the S&P 500 peaked in July or August. This is clearly illustrated by Amazon (AMZN) in the top panel of this week’s chart. This type of divergence where relative performance doe...

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