Investors find themselves paralyzed by uncertainty given mixed messages from prominent market experts and talking heads, some professing the sorry and deteriorating state of the global economy, and others cheerleading the continued improvement in the fundamentals, particularly here in the U.S. Indeed, the nearly identical chart of the S&P 500 in 2015 compared to 2011 gave hope to a similarly solid start to 2016 as we saw in 2012, but instead we have seen the worst start to a New Year in history.

It is no wonder financial advisors everywhere, with most of the their books belonging to older investors who worry more about return OF capital rather than return ON capital, are scrambling to interpret the morass. They know from experience that knee-jerk reactions to such market disarray often produce the exact wrong decisions, abandoning carefully structured financial plans at exactly the wrong time. As FDR famously said, “The only thing we have to fear is fear itself,” and I believe that is true today for U.S. investors as the smoke signals seem to point more to improving rather than deteriorating fundamentals. The best investment opportunities often occur when fear is rampant, while bubbles occur when things are just too darn rosy.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.

Market overview:

The headlines have been scary, no doubt. And there are many high-profile fund managers and market commentators with impressive pedigrees with convincing arguments as to why the global economy is doomed to implosion. I got an email the other day titled “The Dying Gasps of Bubble Finance,” saying that global economic growth has been all smoke and mirrors from central bank largesse. The meetings in Davos have produced a feeling of now-or-never when it comes to saving the global economy from the collapse of China and emerging markets, as China’s total debt has risen to 280% of GDP, and emerging markets aren’t far behind. Moreover, Brazil is on the verge of collapse even as it prepares to host the Summer Olympics. Oil prices continue to languish, even briefly falling below $30/bbl. Corporate earnings are in recession. Credit spreads are widening. Ever-morphing Islamic terrorism has the population on edge. None of the Presidential contenders evokes public confidence. The list goes on.

None of this is new, and indeed last year these issues led to a fearful, headline-driven trader’s market during which stocks demonstrated extraordinarily narrow market breadth, particularly after small caps hit their peak on June 23. To illustrate, just look at the performance difference of the large-cap, cap-weighted SPDR S&P 500 Trust (SPY) versus the small-cap, equal-weighted Guggenheim Russell 2000 Equal Weight ETF (EWRS). Since June 23, SPY fell -9.5% through last Friday while EWRS fell a whopping -25.1%. That’s a nearly 16% performance differential for the cap-weighted large caps over the equal-weighted small caps. Just incredible. And now the start to 2016 has been downright frightening.

But here’s the thing. There is no one (with the possible exception of ISIS) who wants to see the global economy collapse. It is all hands on deck around the world (including governments, central banks, corporations, and small businesses) when it comes to ensuring economic growth and stability. Sure, you can debate the effectiveness of certain tactics being implemented, but ultimately we are all in this together with a common goal of prosperity.

Keep in mind, China just reported 6.9% real GDP growth, and their government will do pretty much anything necessary to ensure continued growth. In addition, both the BOJ and the ECB are suggesting more QE stimulus. As for further rate hikes here in the U.S., Fed Funds Futures are now discounting just one rate hike from the Fed in 2016, if any, as compared to the four rate hikes signaled by the Fed’s dot plot back in December. Unemployment continues to fall. Bond rates remain low, which supports higher equity valuations. And as for inflation, technological advances are inherently deflationary by increasing efficiency and productivity, so perhaps the Fed’s 2% target is outdated.