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Read this week's Major Trend Index.

While our most reliable valuation work is based on the S&P 500 (and closely-related S&P Industrials Index), we monitor several other measures for substantiation and reinforcement.

EM segments on the “Aspirer” watch list for MSCI annual market reclassification: China A-shares and Argentina. The “Achiever,” Pakistan, just recently started trading as a new member of MSCI EM Index.

Within EM, more robust growth is being exhibited by: 1) firms in Emerging Europe; 2) companies in Energy, Materials, and Financials; and, 3) larger cap companies.

The gap between crude oil prices and Energy sector RS is now much wider than seen even at that historic 2014 juncture. The “divergent” weakness in Energy stocks suggests that crude will likely trade lower.

The Amazon Effect masks both the underperformance of the average Discretionary stock and the relative value that’s been reestablished across the sector. “Discretionary ex-Amazon” is a better contrarian pick than Energy.

Last month we suggested that proclamations of a new Technology stock bubble were spectacularly premature. And, following another month of healthy gains, the S&P 500 Information Technology Index still sits on a perch that, fundamentally speaking, looks nothing like that of March 2000.

Leading inflation indicators have leveled off so far in 2017 after last year’s huge rebound from the deeply oversold readings produced by the 2014-2015 collapse in commodities.

When it rains, it pours. As if the market’s broad new highs of early June aren’t enough, here’s a pair of sub-models from the MTI’s Economic category that are set to turn bullish.

On a 50-year view, stocks do indeed look cheap relative to bonds. But the inclusion of 90 earlier years of data muddies the message.

After a two-month lull, stock market momentum reasserted itself in May bringing our summer S&P 500 target of 2,600 back into focus… Meanwhile, we’ve fielded several media calls about the “FANG” stocks’ large contribution to some YTD returns—but that doesn’t diminish the new highs being made elsewhere by disparate groups… NYSE Weekly A/D Line and New Highs/Lows figures also suggest the stock market isn’t yet top-heavy enough to tip over.

The stock market “melt up” scenario is underway but has proven less broad than we expected. Just as in the late-1990s, Technology and NASDAQ are the main subjects of investor adulation.

Read this week's Major Trend Index.

Investment factors experience performance cycles just like every other asset and index. The Value factor is robust across definitions, as all eight versions produced positive excess returns under long/short and long-only methodologies.

The two-month Up/Down Ratio for Q1 results shows a reading of 1.48. Like the quarter before, an excellent “one-month” figure has been dragged down by a second month’s results.

As the numerator of our numerator shrank, the Ratio of Ratios made its way into “Small Cap Discount” territory for the first time in seven months.

Value’s 2016 outperformance gap has been erased in the Large Cap space; Small Cap Value stocks slipped back into negative territory for YTD 2017.

So much for that 2,400 resistance level. The S&P 500 plowed through its March 1st high as we closed out May and started June. Valuations, terrorist attacks, and a cloudier political climate are continually being shrugged off.

Although the glamorous Tech giants have captured investors’ attention of late, from our perspective, the old school, physical Semiconductor plays hold the greatest appeal.

Home Entertainment Software, Managed Health Care, and Specialized Consumer Services are among the month’s intriguing opportunities based on the current Group Selection (GS) Scores.