Such stocks are more sensitive to economic ups and downs, and generally favored when investors are bullish on the market. They include the consumer discretionary sector, comprised of businesses that sell nonessential goods and services.

Year-to-date, consumer discretionary stocks in the S&P 500 are up 10.5 percent.

“It looks to us like employment will continue to slowly improve through the end of the year, and consumer confidence and spending will improve,” says Wren, who expects the S&P 500 index to finish the year at around 1,400 to 1,450, a 13-percent gain for 2011. “If you think the market is going to go up, it’s unlikely to be led by staples and healthcare.”

His advice to clients is to opt for consumer discretionary stocks tied to home improvement, retail and restaurants.

“My glass is half full,” says Wren. “In my opinion, we’re going to see a continuation of modest recovery here in the states and a continuation of global recovery as well. We want clients prepared and positioned for what we think is going to be the second leg up in the cyclical bull market.”

For the same reason, he notes, the materials sector is likely to outperform over the next few months.

The sector includes stocks from companies that mine or process raw materials used in construction, like metals, chemicals, oil and gas .

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