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Health Care remains the highest-rated sector followed by Info Tech and Consumer Discretionary. These sectors have ranked among the top three since June. At the low end of the rankings are Utilities, Telecom Services, and Materials, all of which have been among the bottom three positions for three consecutive months.

Recently, Health Care stocks have been making headlines as the sector rallies to new all-time highs. However, when we look at the sector via Leuthold’s proprietarily-built industry group composition—which has a more realistic market-cap weighting approach—the Health Care sector has been outperforming since the end of 2017, and YTD it is the #1 performing sector in our work.

Read this week's Major Trend.

Through August 2018, total net cash flows into mutual funds and ETFs are positive but remain muted compared to those logged at this time in 2017.

The S&P 500 squeaked out its sixth consecutive monthly gain in September.

Attractive relative valuation outweighs concerns about heavy issuance and moderate deterioration in underwriting standards.

Our Risk Aversion Index fell sharply last month and triggered a new “Lower Risk” signal. Caution is still strongly recommended, and we favor higher-quality credit within fixed income.

While mid-term elections are rarely big market movers, this year’s election demands more attention as it has the potential to alter the balance of political power in Washington.

The recent move higher in rates had broader support as other major markets also saw higher rates.

Since late August even the strongest of the market breadth measures—the NYSE Daily/Advance Decline Line—has failed to confirm highs in the DJIA and S&P 500, while the weakest—which measures 52-week highs and lows—has continued to erode.

Swings within the five factor groups were muted, but the small loss in the Intrinsic Value work was enough to drop that category to a new negative extreme for the current bull market. The new low in this category counters the argument that U.S. stocks would “grow into” their valuations in 2018 thanks to the corporate tax cut and acceleration in GDP growth.

The S&P 500 reported blockbuster earnings growth again in the second quarter of 2018. With the corporate tax cut boosting profits this year, we were curious to know how much of the improvement was tax driven and how much was due to the exceptionally strong economy.

The real short-term interest rate shows how inappropriately-loose monetary policy has remained in the face of a steady economic expansion.

High/Low Logic Index readings suggest a “fractured” stock market. Usually, though, a fractured stock market is also a narrow one, but the evidence on that score is mixed.

In the past year, big-name bond gurus have put forth various yield targets that, if exceeded, would provide definitive proof that the secular bull market in Treasury bonds begun in 1981 had finally ended.

The new GICS Communication Services sector being introduced late-September will include members that add considerable buoyancy to the growth rates and valuation ratios of this traditionally defensive, high yield, slow growth industry. As a newly-invented sector, Communication Services has no financial history, and we felt it was important to fill that void.

Even the long-term trend model on the MSCI ACWI, which has been considerably weaker than the S&P 500 for several months, reverted to bull territory last week.

In late January we speculated how long it would take for the S&P 500’s bloated valuations to reach more reasonable levels. The S&P 500 now trades back where it was in January and the seven-month break included some of the best growth rates most have ever seen. We found ourselves asking: Did chubby Mr. Market shed any pounds as he pedaled away on his stationary bike?

A “moderate-risk” S&P 500 VLT BUY signal was triggered at the end of August, but it’s not all good news. Any upturn in the VLT while the indicator is in positive territory also sets up a pattern known to veteran market analysts as the “Killer Wave.”