Key points:
- We note the relative strength improvement of U.S value, small-cap, developed, emerging, APAC, and EMEA ETFs in the short run, but are also wary of the potential for another head-fake, similar to in June/July.
- A weaker USD in relation to the international ETF, and a stronger economy in relation to all of the above, will likely be necessary to sustain the moves, and for us to recommend overweighting these areas (versus benchmark of large U.S. growth).
- On breakouts, we have seen a pickup in the U.S. and developed markets to above average, but are still waiting on a large spike which could be a true turning point. Emerging continues to lack a high number of breakouts.
- In the short run, areas working best are cheap U.S. Financials, Cyclicals, Semis, Discretionary, and Industrials; Developed Industrials, Health Care ( HK ), and Cyclicals; Emerging Financials and Tech; and China Health Care and Staple.
