Green Book June 1997
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Featured Articles
1997 Volatility: Indicating a Major Stock Market Transition?
Market volatility 1997 to date well above 1992-1996 levels and also above median levels 1957 to present...characteristic of transition years and bear markets.
Adding Cable Sector to Equity Portfolio
Cable hooks up with VLT Momentum measure to improve to Attractive.
Bond Market Summary
Bond market looks attractive on 6-12 month basis. Economic expansion long in the tooth, but still surprisingly strong...Fed may tighten next time to slow down economy. Inflation cool, but wage pressures a worry.
Earnings Momentum: An Unusual Divergence
S&P heaviest weights now experiencing accelerating earnings momentum. Best broad sector earnings momentum: Energy and Healthcare...Worst: Basic Materials, Utilities, and Technology.
Equity Fund Flows…Short Term
ICI reported April net inflows at $10.6 billion, down considerably from January and February but up from March.
Joke of the Month
We do not know who sent this in, but if the source would identify herself/himself, we will be pleased to send out the coveted Blue Ribbon. I did have to do some discreet editing here to get this one by our Commissioner of Good Taste, as well as a special Catholic Review Board.
Major Trend Index is Neutral
The strong and broad May stock market moved the multi-factor Major Trend Index discipline up from Negative to Neutral status.
Scanning the Markets
There was a significant role reversal in May, as small caps significantly outperformed large caps. As a result, about 65% of the sectors we track outperformed the DJIA and S&P 500.
Testing the SS Scoring System
Bottom Ten sectors per SS Scores have been significantly underperforming the S&P 500. Discipline appears to be effective in identifying lagging sectors.
View From the North Country
Current government wage inflation statistics don’t jibe with today’s real world. Future releases will show a significant jump.
Will Active Management Ever Beat the S&P 500?
It will happen again! Relative overweights in small caps will be an advantage instead of disadvantage to portfolio managers. Small caps can grow earnings faster.
Worth Noting
Balanced budget agreement assumes current economic expansion will run about 12 years, longer than any other in history.
Table of Contents
Stock Market
- Major Trend Index is Neutral
- 1997 Volatility: Indicating a Major Stock Market Transition?
- Worth Noting
- Will Active Management Ever Beat the S&P 500?
- Earnings Momentum: An Unusual Divergence
- Equity Fund Flows…Short Term
- View From the North Country
Of Special Interest
Macro Monitor
Equity Strategies
At Random
1997 Volatility: Indicating a Major Stock Market Transition?
Market volatility 1997 to date well above 1992-1996 levels and also above median levels 1957 to present...characteristic of transition years and bear markets.
Adding Cable Sector to Equity Portfolio
Cable hooks up with VLT Momentum measure to improve to Attractive.
Bond Market Summary
Bond market looks attractive on 6-12 month basis. Economic expansion long in the tooth, but still surprisingly strong...Fed may tighten next time to slow down economy. Inflation cool, but wage pressures a worry.
Earnings Momentum: An Unusual Divergence
S&P heaviest weights now experiencing accelerating earnings momentum. Best broad sector earnings momentum: Energy and Healthcare...Worst: Basic Materials, Utilities, and Technology.
Equity Fund Flows…Short Term
ICI reported April net inflows at $10.6 billion, down considerably from January and February but up from March.
Joke of the Month
We do not know who sent this in, but if the source would identify herself/himself, we will be pleased to send out the coveted Blue Ribbon. I did have to do some discreet editing here to get this one by our Commissioner of Good Taste, as well as a special Catholic Review Board.
Major Trend Index is Neutral
The strong and broad May stock market moved the multi-factor Major Trend Index discipline up from Negative to Neutral status.
Scanning the Markets
There was a significant role reversal in May, as small caps significantly outperformed large caps. As a result, about 65% of the sectors we track outperformed the DJIA and S&P 500.
Testing the SS Scoring System
Bottom Ten sectors per SS Scores have been significantly underperforming the S&P 500. Discipline appears to be effective in identifying lagging sectors.
View From the North Country
Current government wage inflation statistics don’t jibe with today’s real world. Future releases will show a significant jump.
Will Active Management Ever Beat the S&P 500?
It will happen again! Relative overweights in small caps will be an advantage instead of disadvantage to portfolio managers. Small caps can grow earnings faster.
Worth Noting
Balanced budget agreement assumes current economic expansion will run about 12 years, longer than any other in history.
Stock Market
- Major Trend Index is Neutral
- 1997 Volatility: Indicating a Major Stock Market Transition?
- Worth Noting
- Will Active Management Ever Beat the S&P 500?
- Earnings Momentum: An Unusual Divergence
- Equity Fund Flows…Short Term
- View From the North Country