LPL Financial Investment Strategist and Economist John Canally tells CNBC's "Power Lunch" he is focusing his allocations in the United States.
"Short term, we maintain a cautious view of developed international equity markets until further evidence of fundamental and technical stability emerge; accordingly, for now, we hold very little exposure to developed international equities," Canally said.
In the U.S., he is staying away from materials. "China's slowdown and transition to a consumer-oriented economy suggest caution; better opportunities may arise later in 2016," Canally said.
Another sector he's avoiding is utilities. "We acknowledged technical strength and lower interest rates with a modest upgrade in February 2016, but rich valuations and interest rate risk may cap further potential outperformance," Canally said.
Materials and utilities are both lower during trading.