Latest Research

A summary table detailing the Attractive and Unattractive sectors and industry groups going into 2017.

A look at various dynamics affecting sector results in 2016, and what we like going into 2017, both at the sector level and among groups.

After three consecutive years of positive performance, the Group Selection (GS) Scores struggled in 2016.

Long-term debt (LTD) issued by S&P 500 companies has risen 75% since 2010, and the resulting deterioration in leverage ratios has been all too evident.

Allocation and performance details of our portfolios for January 2017.

Net cash inflow for 2016 (through November) was muted relative to that of the same period in 2015.

The S&P 500 gained 1.98% in December. Based on the 1957-to-date valuation metrics presented, the potential downside compared to its historical average widened by 1% from last month’s –20% reading.

It’s well-known that 2016 was a very difficult year for active equity managers, as if purveyors of passive products were in need of a lifeline. That’s especially disconcerting because the year was one that offered—if nothing else—big potential for outperformance.

The advance since March 2009 has just surpassed the bull market of 1990-1998 to become the second longest bull of all time, and it will move into the top spot if it can survive until next March 15th (the “Ides of March”). The current record holder is the 1921-1929 bull, which expired just a few days following its eighth birthday.

The Major Trend Index rose 0.02 points to a ratio of 1.14 for the week ended December 23th, with no significant swings within the five factor categories. While the Intrinsic Value work reached another new extreme for the bull market, the balance of the MTI suggests that the category is likely to erode even further before this old bull finally gives up the ghost. Our tactical funds remain positioned with net equity exposure of 64%.

The mania for stability and dividend yield have been two of this bull market’s defining characteristics.

The Major Trend Index fell 0.05 points to ratio of 1.12 for the week ended December 16th, with a moderate loss in the Momentum/Breadth/Divergence category responsible for most of the decline. Net equity exposure in our tactical portfolios is unchanged at 63-64%.

It was less than two months ago that broad market valuations--measured by the Leuthold 3000 median Normalized P/E--were still within the wide range we consider to represent fair value (between the 30th and 70th percentiles). Thanks to the rush of post-election euphoria, that's no longer the case, with median P/E shooting up three points in six weeks to 26.1x.

The Major Trend Index increased 0.05 points to ratio of 1.17 for the week ended December 9th, led by the largest one-week gain in the Momentum/Breadth/Divergence category since mid-July. Some developments contributing to that gain were detailed in last Friday’s “Chart of the Week,” and suggest that a final bull market high is unlikely to be made during the next three to six months. Our tactical portfolios remain positioned with net equity exposure of 63-64%.

Wednesday's action erased two divergences cited in the latest Green Book, with both the NYSE Advance/Decline Line and the Dow Jones Transports moving to new bull market highs. The latter index had failed to do so for almost two years.

A yuuuge market sell-off expected from a Trump win was somehow avoided. Instead of lumps of coal, visions of fiscal stimulus and favorable tax policies danced in traders’ heads. As interest rates dashed higher, the market had a very clear picture of who was naughty or nice.

Thanks to the November surge in Financials and Energy, Value stocks substantially widened their 2016 performance lead over Growth. This has pushed our L3000 median valuation for Small Cap Value stocks to levels not seen since the late 1990s.

Robust Small Cap outperformance in November pushed our Ratio of Ratios back to its long-term median—a 3% Small Cap premium.