Big cap, cyclical stocks to power new market highs: Strategist

Yahoo Finance

The two-week summer shakeout in stocks beginning in late July has almost fully reversed, with the Standard & Poor’s 500 (^GSPC) making a near-perfect V-shaped bottom and rebounding to 1986 Wednesday, within a hair of a new all-time high.
So was this a fleeting and now-expired buying opportunity, or can investors plausibly play for more upside into September?
Chris Konstantinos of Riverfront Investment Group in Richmond, Va., says his firm’s tactical signals detected the likelihood of a recovery in recent weeks based on a welling-up of overly negative investor sentiment. And to him the picture still looks pretty attractive.
“From here, obviously, 2000 on the S&P is certainly a big psychological level and I think it will take some time and probably a little backing and filling for the market to break it,” he says in the attached video.
“But generally speaking, whether it’s in the next week or two or in the coming months, we expect risk assets globally and the U.S. market in particular to break to new all-time highs and likely to break that 2000 threshold some time in 2014.”
Konstantinos, whose firm specializes in international investing through exchange-traded funds, views cyclical industry sectors to be more attractively valued at the moment. For much of 2014, the market’s climb has been fueled by more stable, less economically sensitive groups, such as utilities and healthcare names.  
Given his expectations for a pickup in the global growth pace heading into yearend, Konstantinos figures the cyclicals – usually exemplified by industrial, technology and consumer companies – should rise to close the valuation gap that low-volatility sectors have opened on them. He also is on board with the theme of large-cap over small, a pattern that has emerged in 2014 after years of leadership by littler stocks.

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