Inside The Stock Market ...trends, cross-currents, and outlook
Small Cap Valuation Check
We don’t have a strong capitalization-bet recommendation, other than to remind readers that Small Caps have been especially responsive to the favorable seasonal window that began November 1st (and which extends through April 30th).
A Longer-Term Take On Sentiment
Stock market bears had a field day when the latest Investors Intelligence sentiment survey (Chart 1) saw the percentage of bullish newsletter writers spike to its “highest level since 1987.”
Cap Weight Or Equal Weight?
The Equal Weighted S&P 500 now trails the S&P 500 by 400 basis points YTD, and the rally is increasingly assailed as too narrow.
A Mysterious Bond BUY Signal…
Sometimes we feel compelled to report findings that conflict with our outlook. And then there are the even rarer times we actually do it.
… Yet Another Bond BUY Signal?
The implication from VLT Momentum is that bonds are sufficiently oversold (or, equivalently, that yields are sufficiently overbought) to trigger some degree of mean reversion over the next several months.
A Study On Closed End Funds
In March 1991, an article titled “Investor Sentiment and the Closed-End Fund Puzzle” was published in The Journal of Finance.
Playing The Bounce: The October List
Starting back in the early 1990s, The Leuthold Group began constructing and sending out an annual list of stocks that appeared to have been the subject of unusual selling pressure late in the year.
Year Of The G.O.A.T. ?
Entering 2017, we expected a stock market “melt-up” to the 2,550-2,600 level on the S&P 500—a move we thought might run into trouble by late summer.
Better To Have And Not Need
"Need To Have” confirming indexes were nearly all perfectly aligned with the latest market high, and a second set of indexes we consider less critical, but “Nice To Have,” has also been in virtual lockstep.
Thoughts On Sentiment
The MTI’s Attitudinal category has held stable over the last several months, an impressive (and contrarily bullish) feat considering the steady onslaught of new bull market highs.
How To Double Your Money In Ten Years
Before the markets punish an irresponsible act, they must first reward it.
Too Much Of A Good Thing?
Swings in the stock market and economic momentum are not always synchronized, and the largest price adjustments in either direction tend to occur when they are not.
Stocks And The Economy
The stock market is often maligned as a poor economic forecaster, and it’s true the market has predicted several more recessions than have actually occurred.
Dialing In On Downside Risks
Question: Your “Estimating The Downside” section shows the S&P 500 would lose 26% if it reverts to its 1957-to-date median valuation level. The downside estimate for the S&P Industrials Index, however, is almost -40%. Why such a huge difference?
Stocks Versus Your “Personal” Inflation Rate
While the bull possesses a seemingly endless supply of energy, the Leuthold database still houses a supply of measures by which the bull market has fallen short.
Breaking The Pattern?
The Chicago Cubs’ break of the 75-year Billy Goat Curse last year might have warned us of the dangers inherent in historical pattern analysis.
Valuation-Based Country Selection/Rotation
Despite cyclicality, over the longer term, investing in lower valuation countries ekes out better performance in an EM portfolio, and Dividend Yield showed the most consistency in terms of value factor effectiveness.
Someday, Fear Won’t Be Bullish
Does this year’s incredibly low stock market volatility mean the end is near? History is inconclusive.
Stock Market Observations
We believe this bull market still has legs… but so too might the mini-correction that’s hit mainly the secondary stocks thus far.
Market Breadth Has Yet To “Lie” Down
We shouldn’t bite the hand that feeds us, but it’s easy to lie with charts.
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