So far, so good. I am pleased the market is responding according to my calls for the past few months. A top for this cycle in the market will probably correspond with interest rates reaching the neutral to restrictive zone.

As we approach the 4.5% mark in short term rates, market players becoming increasingly cautious since a neutral and restrictive rate environment usually results in a recession. Right now, a 4% Fed Funds rate is considered neutral.

Most Favored Sectors

Overweight: Energy, Healthcare, Staples
Slightly Overweight: Insurance, Telecom, Financials
Neutral: Industrials
Underweight: Materials, Utilities, Consumer Discretionary

At the 1250 level on the S&P 500, I will be approximately 50% in cash, and looking to raise the cash level up to 75-80% on any subsequent rallies.