'Completely fine' to enter volatile market phase as investors take profits, says Citi's Drew Pettit

Market Overview - The current market phase is characterized by healthy profit-taking, which is seen as a normal behavior in a bull market, allowing for a more stable setup towards year-end [2][3] - The market is currently experiencing earnings-driven growth, with a fair value estimate around 6600 based on expected earnings growth [4][5] Earnings Growth - Earnings growth is prioritized over cyclical factors, indicating that while growth may not disappoint, it is already reflected in stock prices [6] - There is a notable disconnection from GDP, with the current focus being on structural strength that is already priced in [7] Investment Strategy - The recommended strategy is to buy on dips and sell on strength, which is considered healthy behavior in a bull market [7] - Large-cap growth stocks are favored due to their strong earnings momentum, while small-cap stocks are beginning to show signs of recovery from an earnings growth recession [8][10] Small-Cap Stocks - Small-cap stocks are highlighted as having real earnings growth for the first time in over eight quarters, making them an attractive investment option [13] - The macroeconomic environment, including potential Fed easing, is expected to support small-cap growth moving forward [10][12]