A. Marshall Acuff Jr. Salomon Smith Barney

ON A DEFENSIVE POSTURE
The stock market is likely to continue to be volatile and rotational over the next several months. Investors are buying non-tech growth stocks to diversify risk.

ON WHAT TO WATCH FOR:
In the next six months, it's U.S. interest rates. If they are peaking, then we should see strong Asian markets in the next year.

ON GOOD BUYS
Look for high-quality companies that are improving quarterly earnings. A company should be able to sustain profits if economic growth moderates.

ON FAVORITE SECTORS
Energy and military contractors top my list. As long as crude oil stays above $16 a barrel, energy producers have an incentive to keep drilling for new supply. And U.S. defense spending has turned up after a 13-year hiatus.

ON WHAT TO AVOID
Drug stocks have already had a big move, and there's a lot of uncertainty about whether politicians will push for price controls.