Latest Research

Historically, leadership and breadth accompanying an upside market move is far more predictive than the pure momentum of the move. But when intermediate-term momentum is not just strong but exceptional (as it was until just recently), there has usually been even more upside to follow.

Last month we detailed a handful of economic and monetary measures that were approaching critical thresholds from a stock market perspective.

Our Dow Bond Oscillator (chart) issued what looks like an increasingly prescient SELL signal on January 26th.

In the last couple of months, we’ve come across a handful of economic “check lists” purporting to show the relative absence of recession harbingers as the expansion closes in on its ninth anniversary this summer.

We believe the decline from the broadly-inclusive market highs of late January is a yet another late-cycle correction and not the first installment of something more sinister.

So, what happened to the January Barometer—the old analyst’s maxim that a market gain in January portends a gain for the full year?

The Leuthold Core Portfolio and Leuthold Global Portfolio both lagged their respective all-equity benchmarks in a very strong month to start the year. 

Read this week's Major Trend.

Airlines rebounded after a brief dip to High Neutral; Health Care Distributors is scoring well across the board (other than Technical factors); Specialty Stores is cheap due to the changing retail landscape.

While the Materials sector overall still isn’t looking stellar based on our work, we think with the Metals theme heating up, it’s a trend worth watching. 

January 2018 lived up to the hype in a big way as the S&P 500 turned in its best January performance since 1997.

Our Royal Blue Large Cap Growth names logged a decent “yearly” return in just one month (+9.4% in January). Value continued to lag across all market cap tiers.

Thanks to some outsized outperformance in January, the median trailing P/E for our Large Cap decile rose from 21.5x to 22.5x while the measure for Small Caps remained virtually unchanged.

Our Up/Down Ratio soared to an impressive reading of 2.65—nine years into the current recovery. This is the highest “one-month” reading we’ve seen since 1993.

After a hiatus of several years, we are re-introducing one of our favorite analytical tools. A thematic basket is a custom-designed set of assets which are exposed to, and will react similarly to, a common theme. Our first new thematic basket is “Capital Spending Beneficiaries.”

Several key drivers of capital expenditures look particularly favorable right now, and this research note focuses on the potential for improving business conditions to produce an upswing in capex.

The net impact of the tax reform is significantly positive to investment grade companies as the interest deductibility change has very little impact.

Our Risk Aversion Index turned higher last month but stayed on the “Lower Risk” signal as of the end of January. The first few days of February brought a big surge in this index and would suggest a “Higher Risk” stance for the near term.

With the dollar index breaking below the 2017 low, we believe the dollar bull market that started in 2011 (based on the trade-weighted dollar index) is most likely over.

This multi-factor estimate of stock market risk is based on a regression to median stock market levels.