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Market behavior is always nebulous enough to generate diverging opinions, but lately it’s been sufficiently strange to give rise to a diverging set of facts.

Yes, bulls and bears now hold their respective positions for the same reason—i.e., the U.S. economy is exceptionally strong. The stock market is accommodating this rare bipartisanship with sufficient reason to support either position.

The nine-year stock market “party” may not yet be over, but it’s getting pretty late.

The Major Trend Index continued to deteriorate in June, suggesting that the most likely path for the equity markets, from here, is lower.

Small Caps zoomed ahead of Large Caps the last four months. Couple this with the top-25 largest S&P 500 firms still charging higher and we have a very interesting “barbelled” performance profile.

Growth stocks maintained their dominance over Value in Q2. This outperformance has finally leveled relative historical valuations between Value and Growth.

Our Ratio of Ratios has been stuck in the Small Cap premium range of 2% to 7% for the last ten months—limiting the ability to make a call on market cap preference with this vignette.

Wrapping up Q1 reporting, our Up/Down Ratio is flying high at 2.00. This is the highest “three-month” figure since 1996, even besting those readings immediately following the Great Recession.

Consumer Discretionary can’t be topped; it has held on to the highest-rated spot for seven consecutive months. Utilities and Telecom continue to close out the bottom two. 

Brick-and-mortar retail, not to mention antiquated Department Stores, have pretty much been declared dead in the age of Amazon. Often, this is when our GS Scores shine brightest... by picking industries that, at the time, are not intuitive and hard to stomach.

Political risks linger and the M&A picture remains active.

We believe the negative impact of central bank liquidity reduction is here to stay for the foreseeable future. We recommend defense within fixed income.

As credit spreads widened, something rather unusual happened: investment grade Corporate bonds performed far worse than High Yield bonds.

Today’s market is barbelled regarding company size, with the mega-cap Tech stocks and the S&P 600 Small Cap index both outperforming the middle of the S&P 500.

Read this week's Major Trend.

In 2017, equity and bond funds captured a staggering net $400+ billion. In 2018, uneasy investors are still buying funds, but at subdued levels compared to the same period last year.

The S&P 500 squeaked out a monthly gain for June—earning a “turkey” of three positive months for the second quarter.

We’d concede that neither the relative strength of Small Caps nor the divergently strong action of the NYSE Daily Advance/Decline Line fit the pattern of a stock market undergoing a late-cycle period of distribution, however, the relatively low percentage of NYSE issues now trading above their 30-week moving averages (45.5%) suggests the market may not be as internally healthy as popularly portrayed.

The stock market liquidity squeeze we’ve discussed this year hasn’t played out quite like we expected. Traditionally, Fed tightening and slowing money growth hit Small Caps earlier, and harder, than the blue chip stocks...

After several weeks of muted movements, three MTI categories saw swings of more than 60 points. The Supply/Demand category’s loss was the biggest move, and mostly reflected commercial hedgers’ sudden unwinding of a big net-long position in stock index futures. Such action causes this important “smart money” indicator to be more in line with the DJIA’s Smart Money Flow Index, which continues to act badly.