Follow thru day?

Unless equities rally to end the afternoon, today will go down as a follow thru day to the downside. The early week bounce appears to be failing. Breadth has been weakening in major indices opening the door to seasonal weakness. Barometer portfolios are hedged with index futures and have reduced long positions over the last two weeks.

After maintaining a bullish stance since lows in February 2016 we are more cautious in the near-term. Our intermediate term view remains bullish supported by strong fundamentals, solid risk equity premia and cautious investor positioning however longer term corrections can only happen when started by short term corrections. Our job is not to say what should happen, but rather to focus on what is happening.  Listen to the markets message.

Seasonal weakness is likely to create back half opportunity. With clear leadership themes and low correlations, the current market continues to favour active vs. passive managers.