Major Trend Index
MTI Upgraded To Positive: Net Equity Exposure Now 58% In Tactical Portfolios
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.
MTI Rose 0.01 to Close out February at 1.11
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.
MTI Rose 0.03 to 1.10 - Gain in Momentum/Breadth/Divergence
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.
MTI Rose 0.03 to 1.07 - First Positive Reading in Almost Seven Months
MTI Rose 0.03 to 1.07 - First Positive Reading in Almost Seven Month
MTI Swung to High End of Neutral, Rising 0.08 to 1.04
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.
MTI Remains Neutral: Net Equity Exposure 50-53% In Tactical Portfolios
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.
Major Trend Index Fell 0.01 to 1.00
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.
Major Trend Rose 0.04 to 1.01 - 12th Consecutive Neutral Reading
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.
MTI Fell 0.02 to 0.97 Small Losses in Sentiment and Economic
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.
MTI Still Neutral; Caution Advised
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.
MTI Rose 0.01 to a Still-Neutral 1.00 in its Final Reading for 2014
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.
Major Trend Index Rose 0.02 to 0.99 - Neutral
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%.
The Major Trend Index Dropped 0.02 to 0.97 in the Latest Week
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.
MTI Dropped 0.03 to 0.99 Remains in Neutral Zone
The Major Trend Index dropped 0.03 to 0.99 in the latest week, remaining within the neutral zone in which it’s resided since the end of October.
MTI Range-Bound In Neutral Zone Throughout November
We don’t yet know whether our second-half adjustments to equity exposure will prove premature or just plain wrong. Our tactical funds remain positioned with below-average net equity exposure of about 50%.
MTI Rose to 1.04 - High Neutral
The Major Trend Index rose 0.03 to a high neutral reading of 1.04 in the week ended November 21st, driven (unsurprisingly) by a healthy gain in the Momentum/Breadth/Divergence work. The Core and Global Funds remained positioned with net equity exposure of about 50%, but we are prepared to cover some equity hedges if this work strengthens in the weeks ahead.
MTI Dropped 0.02 to 1.01 - Third Consecutive Neutral Reading
The Major Trend Index dropped 0.02 to 1.01 in the latest week, its third consecutive neutral reading after four weeks in bearish territory. While the blue chip U.S. averages continue to record nominal new highs on an almost daily basis, the relatively modest gains in the MTI’s Momentum/Breadth/Divergence category during this bounce suggest the market’s internal underpinnings remain weaker than in the first half of 2014 (and throughout 2013, for that matter). Our tactical funds remain positioned with 50% net equity exposure.
MTI Rose to 1.03 - Equity Exposure Now 50%
The Major Trend Index rose 0.02 to 1.03 based on data for the week ended November 7th. This reading stands on the high end of its Neutral zone, and prompted us to cover some of the equity hedge in our tactical accounts. Net equity exposure in both funds today stands at 50%, up from 43% in the Core Fund and 41% in the Global Fund previously.
MTI Rose to 0.93 - Two Ticks Below Neutral
The Major Trend Index rose 0.04 to 0.93 in the week ended October 24th, just two ticks below its neutral band. The technical category scored a significant gain after last week’s market surge, while Supply/Demand dynamics became somewhat less negative. Nonetheless, the work taken as a whole continues to support a defensive stance towards equities in the immediate term, and net equity exposure in both the Leuthold Core Fund (38%) and Leuthold Global Fund (40%) remains on the low end of its normal range.
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