Major Trend Index

Riding a major upswing in the Momentum/Breadth/Divergence category, the MTI moved to positive for the first time in almost 10-months. Tactical Funds’ net equity exposure increased to near 55%.

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Based on data through the week ended April 22nd, on the back of a 100-point gain in the Momentum/Breadth/Divergence category, the Major Trend Index pushed a bit further into positive territory, rising 0.03 points to a 1.13 ratio. Leuthold tactical portfolios remain positioned with net equity exposure of 54%.

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The Major Trend Index returned to bullish ground based on data through the week ended April 15th, rising 0.07 to a ratio of 1.10. While it’s a struggle to put together a compelling fundamental (and especially value-based) argument for U.S. equities here, we can’t ignore the improvement in the MTI and related models used for reinforcement. But prices move ahead of fundamentals, and perhaps the work is discounting better times in the months ahead (rebounding earnings?).

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The Major Trend Index fell 0.01 to a ratio of 1.03 based on data ending April 8th, with moderate gains in the fundamental inputs (Valuation, Economics) offset by losses in components related to market action and investor psychology.

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This bullish action forced us to reverse a small mid-month addition to our equity hedge, and net equity exposure in the Leuthold Core and Global Funds is now 46%.

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The Major Trend Index rose 0.04 to a ratio of 1.01 based on data through last week, reflecting moderate gains in the Economic and Technical work. Net equity exposure in the Leuthold Core and Global Funds remains at 40% after last week’s small equity hedge increase of 6%.

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Based on data through the week ended March 18th, the Major Trend Index was unchanged with a 0.97 ratio (low-neutral zone). A big gain in the Momentum/Breadth/Divergence grouping was entirely offset by relatively sizable losses in the other four categories. These category movements prompted us to cut Leuthold Core and Global Funds’ net equity exposure to 40% (down from 46%). Short-term, an MTI return to negative territory could trigger additional increases to the equity hedge.

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Based on data through the week ended March 11th, the Major Trend Index improved 0.07 points to a marginally “Neutral” reading of 0.97 (readings of 0.95—1.05 are Neutral zone). A near 200-point gain in the Momentum/Breadth/Divergence category was the sole driver, offsetting moderate losses in the remaining four categories.

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The Major Trend Index rose 0.10 points over the last five weeks. Despite its improvement, the underlying message is that a cyclical bear market remains underway.

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The Major Trend Index ticked down 0.01 point to a ratio of 0.86 using data for the week ended February 26th. Losses in our sentiment and valuation work offset the technical improvement that had stemmed from recent market gains. The economic category stabilized following a multi-week slide, although there’s no sign the current earnings recession has begun to abate. 

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For the second week in a row, the Major Trend Index gained 0.02 points to close at a ratio of 0.87 using data for the week ended February 19th. We believe a bear market rally remains underway and have positioned the Leuthold Core and Global Funds with net equity exposure of 42%, compared with levels near 32% in the third week of January.

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The Major Trend Index rose 0.03 to a ratio of 0.83 using data for the week ended February 5th. The ratio was lifted by moderate gains in both the Attitudinal and Momentum/Breadth/Divergence categories. The work suggests a cyclical bear market remains in force—and it’s worth noting that virtually every global stock market measure other than the DJIA and S&P 500 tends to confirm that view. Broad market damage, in fact, has been severe enough that we’ve covered another portion of our equity hedge, lifting net equity exposure in the Leuthold Core and Global Funds to 40% from 36-37%.

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The MTI fell deeper into bear territory during a horrendous market month. The 0.80 ratio is consistent with an ongoing primary bear market—and so are many of the moves by various MTI categories.

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Based on data through last Friday, the Major Trend Index rose 0.07 points to a ratio of 0.80. It benefited from a huge jump (115-points) in the Attitudinal category and a solid gain in the Intrinsic Value work. Steady improvement in these countertrend categories, combined with deeply negative readings in the Momentum/Breadth/Divergence work, is characteristic of an ongoing cyclical bear market; the body of evidence suggests it’s still too early to hit a major low in equities.

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The Major Trend Index fell 0.06 points to a ratio of 0.73, using last week’s data (week ended Friday, January 15th). Essentially all of our trend-following work is now confirming that a cyclical bear market is underway. In fact, the new closing low this week, on January 20th, confirmed our suspicion that the S&P 500 decline from its high close on November 3rd represented the second leg of the bear market decline from the bull market high May 21st.

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The Major Trend Index dropped 0.13 points to a ratio of 0.79 using data through January 8th. Several trend-following sub-models confirmed what our other "anticipatory" tools have been telling us for many months: a cyclical bear market is underway. Bearish market action to open 2016 has driven our tactical funds’ net equity exposure down to the 34-35% range. We’ll consider covering a portion of the equity hedge if evidence of a short-term low appears.

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Leuthold Core and Global Funds’ net equity exposure trimmed back to 38%. It is now our opinion that the early January sell-off constitutes part of a second downleg in a cyclical bear market that began in May 2015.

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The Major Trend Index rose 0.03 in the latest week’s data to 0.92. The Momentum/Breadth/Divergence category, with a moderate gain, is primarily responsible for the improvement. Our shortest-term indicators are solid enough that we wouldn’t rule out a narrow move to new cycle highs in the DJIA and S&P 500 during the first week or two of 2016, but our longer-term work still points toward considerable cyclical risks for equities. The Core and Global Funds both remain positioned defensively with net equity exposure of 39%.

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The Major Trend Index inched up 0.01 in the latest week’s data to a ratio of 0.89, with several sizable swings within its five indicator groupings largely cancelling one another out. This work remains consistent with a high-risk environment for equities, and both our Core and Global Funds are positioned defensively with net equity exposure of 38%.

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