Sentiment and Optimism Moves Higher

03/22/2017 2:50 am EST

Focus: ETFs

James Stack

President, Stack Financial Management

The technical picture for equities is stable. On the economic front, the news has been positive. Preliminary data for March from the University of Michigan/Reuters showed that the Index of Consumer Sentiment moved higher on increasing optimism about current economic conditions. 

At the same time, the Conference Board’s Leading Economic Index increased for the sixth month in a row, with broad strength in the ten components.

In the Model Fund Portfolio, we recommend reducing the position in the Health Care Select Sector SPDR ETF (XLV) from 17% to 15%, and increasing the Energy Select Sector SPDR ETF (XLE) from 7% to 9%. The overall invested allocation remains at 84%.

These changes in the Model Fund Portfolio are intended to balance portfolio holdings, locking in profit in Health Care and increasing exposure to the Energy sector which recently pulled back slightly. 

Signs of excess speculation and enthusiasm are emerging as this bull market continues to age. Hence, we are holding the invested allocation in the Model Fund Portfolio at 84% invested.

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