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Key Indicator Issues Signal To Reduce Stock Risk

Financial stocks should benefit from phenomenal employment trends as well as rising rates. Yet the Financial Select Sector SPDR (NYSE:XLF) is down roughly 12% from a 2018 high and down nearly 5% year-to-date.

Cyclical stocks should excel in a strong economic environment. Nevertheless, the iShares Transportation Average ETF (NYSE:IYT) is down approximately 11% from its 2018 peak and down 3.5% this year.

Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Google (NASDAQ:GOOGL)? Market-driving FANG stocks? Tech leadership is off anywhere from 16%-30% from record-breaking tops.

At present, there are only three economic sectors that boast technical uptrends. Consumer staples, utilities and healthcare. In essence, investors have shifted to a decidedly defensive stance, in spite of the reality that few economists see recession risks.

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