The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (

The FRED Report

) -- In August, the stock market situation has turned extremely volatile, and this has made Sector Analysis more difficult. In response to this, I have evolved a sector strategy comprising two groups of sectors: Sectors for Offense and Sectors for Defense. (for Current Macro Market Video Comments --

click here

)

Right now, we are officially overweight two sectors -- Energy (XLE), and Technology (IYW),

as readers know. These sectors continue to perform well, particularly on up days in the market. We show charts below, and ask readers to notice how these have fared vs. the SPY, especially with reference to the June low.

Image placeholder title
Image placeholder title
Image placeholder title

In addition, there are many stocks in these sectors that are outperforming the SPY. We show four charts below as examples, and there are others.

Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title

Yet, these two sectors may be too aggressive for market conditions -- especially should the market conditions become appreciably worse, and for longer than we expect. For example, what if the retest of the August low is NOT successful -- what will perform best then? And, my allocation is more suited to aggressive accounts -- how should ultra conservative accounts be positioned?

To answer these questions

we have some defensive sector ideas: XLP (Consumer Staples), and IYZ (Telecom)

. To an extent, XLU (Utilities) could also serve, but we have interest rate concerns -- rates could rise sharply should there be favorable economic news, and if bonds decline abruptly XLU could also decline. This is why we are officially underweight Utilities, and would recommend them only to the very nimble. We show some charts below.

Image placeholder title
Image placeholder title
Image placeholder title

While IYZ is farther below the June lows, stocks in this sector have above average yields that should help them should the market trade worse than generally expected. Also note this ETF has recently been impacted by adverse AT&T/T-Mobile news -- AT&T has declined sharply, but may rebound in the weeks ahead.

XLP is traditionally defensive, and some of the holdings here have been strong out performers. XLU has performed well, and some of the names are good for income

. We show some stocks on the next page by way of illustration.

Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title

One big challenge advisers may have is switching between offense and defense over the next few months, as market conditions clarify. For now, the sectors discussed look to be the most attractive for either scenario.

Fred Meissner is founder and publisher of

The Fred Report

. Fred is a CMT and past President of the Market Technicians Association (MTA). He recently left Merrill Lynch's Market Analysis Department and Sector Strategy Department to form The Fred Report. A detailed bio is here:

Fred Meissner

.