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Read this week's Major Trend. 

Read the latest MTI commentary.

All three strategies posted strong relative results in May. Core gained 3.3% with balanced net equity exposure, while Select Industries advanced 7.1%, outpacing both large and small cap indexes. Grizzly Short managed downside well, declining 5.0% in a sharply rising market. The Major Trend Index shifted to Neutral, signaling a more constructive technical backdrop.

Read this week's Major Trend. 

Stock-market dip buyers have again been handsomely rewarded, although it’s important to distinguish between words and action. Few (if any) being vocally bullish at April’s lows had told anyone to sell beforehand, and it’s likely their reward was more reputational than monetary.

We’re intrigued that Industrials was the first broad sector to eclipse its pre-correction high, and is still the only one to accomplished that. A market technician might argue that the divergent strength in such an economically sensitive segment is a bullish portent for the economy and stock market—but history doesn’t support that view.

Since the low in Oct. 2022, SPX is up 66%—typical for a bull market of this age; however, the broad-market stampede distinguishing a youthful bull never happened. Yet, those four years of futility were not in vain—the valuation profile for the average stock has improved markedly.

We’re trying to draw obvious parallels between today’s bifurcated stock market and the late 1990s. But here, we do it solely to illustrate that the NYSE Daily Advance/Decline Line may be giving a too-rosy picture to market technicians—and the vastly greater number of closeted technicians. 

The NYSE Daily Advance/Decline Line hit a new high in May, which has traditionally been an “all-clear” for the stock market on a three- to six-month basis. Yet, the A/D Line’s strength doesn’t square with the rebound’s resumption of Large Cap leadership.

There have been wild gyrations in the S&P 500 Cyclical/Defensive Ratio over the last year against a backdrop of historically high Cyclical valuation premiums. In other words, there’s no recession bet priced into the equity segments that should most reflect it.

It turns out the “front-running” prophesied by bullish economic analysts has occurred in Prices, not New Orders. Such a backdrop is usually challenging for stocks. 

The sheer size of the equity market relative to U.S. GDP (roughly a two-to-one ratio) means that market swings—which always influence the economy—have taken on a more prominent role. 

There’s a strong argument that the internal peak of the bull market is behind us. The Equal-Weighted S&P 1500—featured prominently in this section this month—is still down 12% from its November 25th bull market peak.

Net income soared almost 24%, with each step in our earnings growth waterfall registering in the green. Pretax margin expansion contributed 9.2%; however, this last step of the waterfall is always influenced by unusual items—and Q1 saw an abnormally positive impact from lower write-offs.

Developed due to the growing interest in private debt and equity, these vehicles offer a degree of liquidity and transparency within a regulated, standardized fund format. While fees and expenses are lofty versus OEFs and ETFs, interval funds’ relatively high current income may be very appealing to some.

Read this week's Major Trend.

The S&P 500 is back within spitting distance of its all-time high, and, as one would guess, our downside calculations are stretched almost to their contemporary extremes.

Growth quickly U-turned and led the market higher over the last two months, while low volatility stocks have been discarded. Momentum has weathered the volatility well so far—especially within small caps.

While the “Trump put” materialized in May, the markets are again becoming complacent toward both policy uncertainty and geopolitical risks.

Despite heightened uncertainty from shifting trade policies, credit markets remain relatively stable—at least for now. While bank lending standards are tightening and loan demand is softening, market-based indicators like credit spreads and bank stock performance suggest credit risk is contained. If that holds, the broader economy may avoid serious damage, even as tariffs rise.