We have three strategic asset-allocation models, targeting risk-tolerance levels: Conservative, Growth and Aggressive. We make tactical adjustments to the models based on our outlooks for the segments of the capital markets. Performance matters and we monitor it closely. In 2025, stocks and bonds started the year close, but stocks have pulled into the lead through November. From an asset-allocation standpoint, our Stock-Bond Barometer model still slightly favors bonds over stocks for long-term portfolio positioning. We are over-weight on large-cap stocks at this stage of the market cycle. We favor large-caps for growth exposure and financial strength, as well as exposure to the IT sector. Our recommended exposure to small- and mid-caps is 5%-10% of equity allocation, below the benchmark weighting. The dearth of IPOs in recent years has meant a lack of exciting new companies in the small-cap marketplace. While the top tier of stocks have soared on enthusiasm for AI, legacy small companies haven't been able to innovate to the same degree. One of the market surprises this year has been the performance of global stocks, which have turned in impressive results. We expect the long-term trend favoring U.S. stocks to reemerge ultimately, given volatile global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target an increased 15%-20% of equity exposure to the group. In terms of growth and value over the longer term, we anticipate that growth, led by the Information Technology sector, will top returns from value, led by Energy, Real Estate, and Materials, due to favorable secular and demographic trends.

Sustainable Impact Investing is gaining traction not only with Argus Research clients but also with the global investment community. As assets have flowed in over the past 40 years, Sustainable Investing has evolved. The discipline, originally known as Socially Responsible Investing, first focused on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. In time, the list of industries to avoid increased to include soft drinks, fast food, and oil and gas, among numerous others. Performance of initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights. Given the strategy's focus on leading management practices, we expect the growth curve for Sustainable Investing to again slope upward in the years ahead.

The stock market turned the corner following Thursday's rather large downside reversal, which just happened to coincide with the short-term disappointment over Nvidia's quarterly report. The S&P 500 closed at $6,539 on November 20, just points below its prior low from October 10. Since then, the entire market reversed higher -- and this time, stocks were not led by Information Technology, but rather by diverse sector and industry strength. While IT and semiconductors have bounced, some of the largest losers on Tuesday were AMD, NVDA, SMCI, VST, and NFLX (which all fell between 2.4% and 4.2%). The IT sector was near the bottom, with a 0.3% gain, with only Energy (XLE -0.6%) and (XLU -0.4%) worse off. As we have talked about in recent commentaries, Healthcare (XLV) led once again on Tuesday, with a 2.3% pop, followed by Discretionary (XLY +2.1%); Materials (XLB +1.5%); Staples (XLP + 1.4%); Industrials (XLI) and Financials (XLF), both rising 1.3%; Communication Services (XLC +1.1%); and Real Estate (XLRE +0.8%). So there was strength in many different sectors and industries, and rotation remains in gear as money flows from area to area but never moves to the sidelines. The S&P 500 reclaimed its 21-day exponential and 50-day simple averages, but ran right into the key 61.8% retracement of the recent decline. In addition, price ran right to prior support off the lows since late July -- which is now resistance in the 6,770 area. A pop over this region will likely put an end to the multi-month sloppy action and open the doors for new all-time highs during the last month of 2025. (Mark Arbeter, CMT)

For the second time this week, stocks were hit with consistent selling pressure as November is off to a rocky start. Technology, and more specifically, semiconductor and software stocks, led the downside once again. Weakness from the largest semi and software companies was evident, with NVDA off 3.7%, AVGO 1%, TSM 1.5%, AMD over 7%, MSFT 2%, ORCL 2.6%, PLTR almost 7%, and CRM 5%. It wasn't just the mega caps that were hit, with former leaders, some of which reported Q3 EPS, wrecked -- including ELF (-35%), DUOL (-25%), DASH (-17%), HOOD (-11%), and AXON, which fell 8% after Wednesday's 9% slide. OUCH! The S&P 500 fell 1.1%, falling below its 21-day exponential average (EMA) and with a minor 5-day/13-day EMA bearish crossover. Key support from the rising 50-day lies at 6,666, with chart support at 6,550 (from the recent low on October 10). The Nasdaq and the Nasdaq 100 (QQQ) lost 1.9% and both broke their 21-day EMAs. The 50-day for the QQQ is at 601 with chart support at 589. Buying the dip (BTD) has taken on a different meaning since the April bottom. Dips were once considered multiple-week affairs, with the S&P 500 dropping 5% to 10%. The index has seen a daily drop of more than 1% nine times since April 7. Incredibly, it has rebounded the next day every signal time, with five of those occasions wiping out the loss from the previous day. One way to spot a potential trend change is to look for a technical clue known as a change in character. If the current very rapid BTD stops, that would be a change in character. (Mark Arbeter, CMT)