Major Trend Index

The Major Trend Index dropped 0.02 to a still-bullish 1.13 last week, with losses in the Supply/Demand and Momentum work edging out modest gains in the Economic and Attitudinal categories. Net equity exposure in the Core and Global Funds remains unchanged at 58% following last week’s 3% increase, and the path of least resistance in the immediate term remains up.

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The Major Trend Index rose 0.06 last week to a 10-month high of 1.15, led by a 95-point jump in the Momentum/Breadth/Divergence category. The improvement in the MTI and supporting analyses prompted us to cover a small (3%) short position in the SPDR S&P 500 ETF Trust, bringing net equity exposure in both the Core and Global Funds up to 58% from 55% a week ago.

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The Major Trend Index fluctuated within a tight band during the last five weeks and closed the week of April 3rd at a mildly positive 1.09, down from 1.11 at the end of February.

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The Major Trend Index fell 0.02 to 1.07 in the latest week, led by moderate losses in the Supply/Demand and Momentum/Breadth/Divergence work. Net equity exposure in both the Core and Global Funds continues to target the 55% level.

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The Major Trend Index continues to levitate just above its neutral zone, closing the week of March 20th up 0.03 to 1.09. While this work is not as emphatic as we would like, it remains enough to keep us postured with net equity exposure of 55% in both the Core and Global Funds.

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MTI Down 0.01 to 1.06 - Just Above Neutral Zone

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An already overvalued stock market is likely to become more overvalued in the short to intermediateterm. If the market peaks out here, it will have pulled a fast one on virtually all of stock market history.

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The Major Trend Index rose 0.01 last week to close out the month of February at 1.11, a reading that, while only mildly bullish, is nonetheless the highest MTI tally since June 2014. Solid gains in both the economic and technical categories more than offset other negative swings during the week.

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After breaking into positive territory in the week ended February 13th, the Major Trend Index improved again last week. The Index closed up 0.03 to 1.10, led by a 40-point gain in the Momentum/Breadth/Divergence category. Overall, we’d now consider the MTI and our related stock market disciplines to be moderately bullish and target net equity exposure of 58% in both the Core and Global Funds.

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MTI Rose 0.03 to 1.07 - First Positive Reading in Almost Seven Month

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The Major Trend Index swung from the low end to the high end of its neutral zone in the latest week, rising 0.08 to 1.04. The past two weeks’ market action (rising stocks, falling bonds) had already driven net equity exposure in the Core and Global Funds to around 53%, and this morning we covered part of our equity hedge to bring net equity exposure to 57% in both funds.

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While we remained in the Neutral zone throughout January, the margin for error by month’s end had diminished to just 0.01. The neutral zone was designed to withstand a fair amount of market noise, and that’s certainly been a good thing in light of the market chop experienced since November.

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The Major Trend Index fell 0.01 to 1.00 in the latest week, with moderate swings in the Economic/Interest Rates/Inflation and Supply/Demand categories mostly offsetting one another. However, the bigger picture has changed little during the MTI’s 13-week stay in its neutral zone: Valuations and sentiment remain very inflated at a time when internal stock market action has become more disjointed. However, the technical work has not deteriorated enough to drag the MTI into bear territory, and the deflationary impact of the last six months’ commodity collapse has (so far) had a net positive impact on this work.

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The Major Trend Index rose 0.04 to 1.01 in the latest week, the 12th consecutive neutral reading dating back to October 31, 2014. The MTI’s message remains that stock market risks are elevated, and we continue to target reduced net equity exposure of 50% in the Core and Global Funds.

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The Major Trend Index fell 0.02 to 0.97 in the latest week, driven by small losses in both the sentiment and economic work. Technical market action, while hardly impressive, remained just bullish enough to keep MTI from falling into negative territory (i.e., readings below 0.95). We continue to target below-average net equity exposure of 50% in the Core and Global Funds, and are prepared to make further significant reductions if the MTI finally rolls over into “bear” territory.

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We are pleased with our results for 2014, as we averaged about 58% net equity exposure throughout the year and were within throwing distance of the all-equity benchmarks. Our performance run was substantially smoother, though, and earned good risk adjusted returns. We made no substantial changes to our allocation in December.

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The Major Trend Index rose 0.01 to a still-neutral 1.00 in its final weekly reading for 2014. Three of the five MTI categories declined on the week, with the Intrinsic Value work moving to a new negative extreme for this bull market. But these modest losses were more than offset by a gain of +46 points in the Momentum/Breadth/Divergence category.

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The Major Trend Index rose 0.02 to 0.99 in the latest week, remaining within the neutral range where it’s been contained since late October. The background of inflated U.S. valuations, complacent sentiment and deteriorating internal market action continues to worry us, but the MTI’s trend-following elements have remained healthy enough to prevent us from moving to a more defensive posture. Net equity exposure in both the Core and Global Funds remains unchanged at 50%.

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The Major Trend Index dropped 0.02 to 0.97 in the latest week, led by a steep drop in the Momentum/Breadth/Divergence category.

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