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The S&P 500 has rallied 9.2% in the 22 trading days since its June 3rd low, but the move hasn’t (yet) been enough to lift the Major Trend Index out of its negative zone.

The Leuthold Core and Global portfolios both lagged their respective 100% equity benchmarks in June as the market rebounded from the May sell-off.

The metaphysical guarantee of a July rate cut chased away the unpleasantness of the May sell-off. In June, the S&P 500 posted its best month since January, and revisited the all-time highs of April and September of last year. Gains were pervasive in June; Google posted the only monthly loss of the index’s largest 50 firms.

And the nine previous quarters! In an amazing run, our Royal Blue Growth has now outperformed Royal Blue Value for ten consecutive quarters.

Things are starting to get very interesting in this vignette. A sharp move down into Large Cap premium territory is reminiscent of market action in the late 1990s.

Our final Up/Down Ratio for Q1 reads 1.12—in line with the earnings recession of 2015-16. Things don’t get any easier for Q2 as those results will be compared to the highest—and final—Up/Down ratio (2.06) of the 2018 earnings bonanza.

Read this week's Major Trend.

Our Risk Aversion Index fell in June but stayed on the “Higher Risk” signal generated in May.

The pattern of sharp sell-offs followed by equally sharp rallies continued in June. Most risky assets recouped nearly all the losses suffered in May, and then some.

Last month we noted that current interest-rate expectations might indicate good timing for dividend investments; however, we strongly suggested being selective, and lean toward high-quality dividend payers.

The top-three-rated sectors are Communication Services, Financials, and Real Estate.

The Financials’ Group Selection (GS) Score sector-composite rating has incrementally improved over the past five months, rising to rank #2 out of 11 sectors in late June.

We believe the results of every investment operation depend, more than anything else, on the quality of the investment philosophy and process that drives the portfolio.

Through May 2019, total net cash flow into equity and hybrid mutual funds and ETFs have turned negative.

The S&P 500 spiked 6.9% higher in June, recouping nearly all the loss incurred in May.

The bounce in the Economic category interrupted its last few months’ steady grind lower; the increase was led mostly by an upgrade to the NOPE Index (ISM New Orders Minus Price Index), which moved from high neutral to moderately bullish. The action of individual components is hardly reassuring, however.

As global rates have taken a precipitous dive the last few months, it’s been hard not to hum “Limbo Rock.” And just like Chubby Checker, we’ve been asking our screens “How low can you go?” on a daily basis.

The Economic work continues to erode, and it would now be deeply negative if not for the conventional scoring of our leading inflation measures, in which disinflation is viewed as a good thing. But if our suspicions that this economic cycle will end in a deflationary bust are correct, the conventional interpretation will be wrong.

Yesterday’s S&P 500 new all-time high triggered a few simple internal studies we’ve used to help shape second-half expectations for the stock market.

A less-publicized, but still worrisome “inversion” occurring beyond the Treasury market is that of Consumer Confidence, in which the Conference Board’s Present Situation Index has soared almost 70 points above the Expectations Index. This gap always becomes extreme in the late stages of an economic expansion, and today’s reading surpasses those recorded at all business cycle peaks other than February 2001.