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

Profitable investing overseas requires not one, but two, successful decisions: 1) select an outperforming asset class; and, 2) be in a currency that provides a favorable foreign exchange impact.

The Financial sector is up more than 30% from last summer’s Brexit lows and, as of March, ranks atop our Group Selection (GS) Scoring framework for the fourth consecutive month.

Read this week's Major Trend Index.

The stock market looks overbought on virtually every technical measure we can think of, but an overbought condition doesn’t always mean the market is vulnerable. To the contrary, we’ve found that “initial” overbought readings—like the one triggered last week on the S&P 500’s 14-Week Relative Strength Index—are generally followed by above-average gains in the intermediate-term (Chart).

Read this week's Major Trend Index.

While stock market valuations are high, they are still considerably below their Technology bubble peak of March 2000. We’ve therefore conceded that there’s still room for a true market melt-up as long as cyclical conditions remain positive.

Read this week's Major Trend Index.

Growth Is Re-emerging: A recurring theme in recent Leuthold Group research is the apparent turn in corporate profits and a general improvement in business results. To monitor corporate sales/earnings trends, we measure the number of companies reporting higher quarterly sales and earnings than a year ago, versus companies reporting lower sales and earnings.

Automotive Retail improved into the top five rankings; Biotechnology, despite being out of favor, has both long-term growth potential and higher profitability than Pharmaceuticals; Developed Diversified Banks is up almost 20% since the election.

We take a deeper dive into Hotels & Leisure’s GS Score and fundamental industry drivers to explore what the group has to offer above and beyond its membership in the “Trump Trade” trend.

As we get further into the era of Trump, it will be interesting to see how the market balances anti-immigration and anti-free trade policies with deregulation and tax reform.

Growth stocks scored a modest win over Value in January. This broke impressive streaks of Value domination—Growth’s last win in the Mid Cap space was last June.

After spiking higher in December, our Ratio of Ratios settled closer to its long-term average in January (thanks, in part, to relative underperformance in the Small Cap space).

Building on the momentum of the past few quarters, our “one-month” Q4 ratio sits comfortably above its historical mean for the first time in seven quarters.

After the big supply last month, we believe there is more room for spreads to narrow.

This new signal is mostly due to a much lower reading three months ago.

The market seemed hesitant to push the Trump trade any farther as new policies have focused on trade renegotiation and immigration, the less positive part of the policy package.

While factors do offer excess return they are by no means winners in all seasons. Our findings show that factor returns are cyclical, volatile, and unstable over time.

The Major Trend Index stabilized in a moderately bullish range during the past several weeks.