Consequently, the strategist has a positive view on cyclical sectors, along with long-term position on global diversification. However, he did warn of short-term volatility, especially as we hear central banks tinker with their policies, such as China, the U.S. and Japan.
Investors should select “among sectors and industries that are cyclical benefit from growing U.S. economy,” Arone advised, including consumer discretionary, health care, financial, technology, and sub-sectors like homebuilders, pharmaceuticals, biotechnology, health equipment and regional banks.
ETF investors can track these sector picks through a range of SPDR ETFs, including the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY), Technology Select Sector SPDR (NYSEArca: XLK), Financial Select Sector SPDR (NYSEArca: XLF), Health Care Select Sector SPDR (NYSEArca: XLV), SPDR S&P Homebuilders ETF (NYSEArca: XHB), SPDR Pharmaceuticals ETF (NYSEArca: XPH), SPDR S&P Biotech ETF (NYSEArca: XBI), SPDR S&P Health Care Services ETF (NYSEArca: XHS) and SPDR S&P Regional Banking ETF (NYSEArca: KRE).
Gauging investment sentiment, Arone found that “folks seem to be, at least what financial advisors explain, fairly calm” as we witness a normal market correction in a longer upward trend in stock prices.
“Our expectation is that this is not the onset of another 2008 or a bear market,” Arone said.
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Max Chen contributed to this article.