Even though the S&P 500 has pulled back less than 3% from its highs, many stocks are 10% to 20% off their highs. Investors have been flocking to defensive stocks and away from energy and technology stocks.
The herding effect in this market is unlike any I can recall seeing. Even when the top line indices don't show momentum, the sectors show extreme momentum. I am taking advantage of this by building positions in technology stocks, which investors are stampeding out of. They are becoming cheap on an absolute basis even if we assume that we are headed for another recession.