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Sector Ratings Set Asset Allocations

Construction has 58 stocks or 36.5% of the 159 stocks in this sector rated strong sell or sell, the sector gets an underweight rating.

One of my themes for 2013 was that The Housing Recovery will remain sluggish in 2013. The National Association of Home Builders Housing Market Index may be above the neutral 50 reading with a current reading at 52 in June, but since this report was released on June 17, the 30-year mortgage rate rose 53 basis points to 4.46%. This could put the brakes on the housing recovery.

Most on Wall Street say that the housing market has turned the corner. My concern is that this corner is on a dead end street.

On June 21 I wrote, Homebuilders Hurt by Fed Policy and the PHLX Housing Sector Index (^HGX) (179/07) traded below its 200-day simple moving average for the first time since Dec. 20, 2011. The housing index is up by only 4.5% year to date and is 14.7% below its May 20 high at 210.01. At the low on April 24, the housing index was briefly in the red for 2013.

Two home builder stocks were upgraded to buy from hold as the housing index bottomed; Beazer Homes (BZH - Get Report) and PulteGroup (PHM - Get Report). For Beazer ($17.71) my semiannual value is $14.82 with a monthly pivot at $17.72 and weekly risky level at $20.04. For Pulte ($19.11) my semiannual value level is $14.85 with a quarterly pivot at $19.37 and monthly risky level at $21.69.

Consumer Discretionary has only seven stocks rated buy and only 17 rated sell, this sector of 430 stocks gets an equal-weight rating.

Consumer Staples has 98 stocks or 36.8% of the 266 stocks in this sector rated strong buy or buy, the sector gets an overweight rating.

Finance has 176 stocks rated strong buy or buy and 143 rated strong sell or sell, this sector of 2943 stocks gets an equal-weight rating. In my second post today I will profile the buy rated community banks as the America's Community Bankers Index (ABAQ) as this index sets a new multi-year high at 204.48 on Monday.
[Read: <a target="blank" data-add-tracking="true" href=""><em> Student Borrowers Face Grim New Reality</em></a>]

Industrial Products has 59 stocks rated strong buy or buy and 85 rated strong sell or sell, this sector of 361 stocks gets an equal-weight rating.
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