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While the number of recession forecasts is on the rise, there’s a general reluctance among economists to project a downturn in the absence of a yield curve inversion.

While investors obsess over the market level at which a hypothetical “Powell Put” might come into play (or whether such a put even exists), they seem to have overlooked the absence of another such put that proved dependable throughout the cyclical bull market.

The December employment report temporarily eased fears of a severe U.S. slowdown. That’s a mystery to us.

For those who remain skeptical that more stock market troubles lay ahead, we’ve supplemented the MTI and our other market tools with something truly authoritative: Evidence from a gossip column in a 1958 issue The Minneapolis Star!

At some point in his career, famed stock trader Jesse Livermore ceased using the terms bull and bear,  opting instead to describe trends in terms of “lines of least resistance.”

As markets sold off in December, the Leuthold Core and Global Portfolios both fared well versus their respective 100% equity benchmarks.

Read this week's Major Trend.

2018 was frustrating for most investors as Value continued to struggle and positive Momentum performance was difficult to capture. Small Caps, Mid Caps, and ADRs also underperformed.

The top-three rated sectors are Health Care, Communication Services, and Consumer Discretionary, with Information Technology dropping from the top-three. Rounding out the bottom end of the rankings, for the second consecutive month, are Materials, Energy, and Consumer Staples.

The Homebuilding stocks represent another Consumer Discretionary group ranking Attractive via our GS Scores; we have held the Homebuilding group for the last year and a half. Homebuilders is an extremely rate-conscious industry group given mortgage rates’ impact on housing affordability (and thus, demand).

There was a lot less Christmas cheer with the market down 15% through Christmas Eve. The S&P 500 was propped up by a few big firms in 2018. Our 25-Largest firm average ended the year in positive territory and bested the Equal Weighted Average by almost 11%.

Our tech-heavy Royal Blue Growth segment faltered toward the end of the year but held up better than any other segment in a rough 2018.

This is the farthest our Ratio of Ratios has dipped into the Small Cap P/E discount zone since 2003.

With Q3 earnings season complete, our Up/Down Ratio stands at 1.85. We’re now left with one quarter of the sweet 2018 vintage to report—but take note of the tough YOY comparison on deck.

Despite some near-term oversold conditions in risky assets, we continue to recommend defense and expect higher volatility to remain across all asset classes.

We are heading into a pre-election year that boasts one of the best time-cycle patterns. Most markets, Developed and Emerging, show good patterns for 2019, even with different election cycles.

Many were caught off guard by the relentless drop in stock prices and bond yields, but we think the real problem is that most people have underestimated the twin threats of central bank tightening and the ongoing trade war with China.

The “Dreams” portfolio represents a simple industry group trend-following approach, while the “Nightmares” portfolio serves as a bottom-fishing strategy made up of the previous year’s biggest losers.

Quality is one of the most popular and successful of the smart beta factors. It is intuitively appealing and serves as a useful defensive strategy in market drawdowns.

As of November 2018, net cash flows into mutual funds and ETFs are positive but significantly muted compared to those logged at this time in 2017.