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We examine the factor category strength behind Apparel Retail, Life Sciences Tools & Services, and Technology Hardware Storage & Peripherals.

Attractive-rated groups include Building Products, Homebuilding, and Household Durables—these three groups possess similar industry drivers and thus exhibit highly-correlated stock returns.

We made it through the entire month of August without a 1% daily move (in either direction) for the S&P 500. We have to go back to July 8th, 42 trading days, to find the last 1% move. This is the sixth longest streak without a 1% move since 1979.

Value stocks edged out Growth in each market cap segment. Small and Mid Cap Value remain the best performing segments YTD, up 14.6% and 13.2%, respectively.

Our Ratio of Ratios made a fresh 13-year low in August. Small Caps are now selling at a 6% valuation discount using non-normalized trailing operating earnings.

Adding in the second month of Q2 2016 earnings, our Up/Down Ratio now sports a reading of 1.23. If we isolate the month of August, it was the best second-month result of the past six quarters.

There is still room for spreads to compress. We maintain our Favorable view of US Investment Grade Corporates.

Given the not-too-hot-not-too-cold macro backdrop, we expect the credit rally to continue in the near term and favor spread products within fixed income.

Whether rates hike in September or December, we know the Fed will be very supportive of the market and the biggest beneficiaries will likely be EM and higher-yielding assets.

After performing well since the 2009 meltdown, Momentum is having its first noticeably poor year. The magnitude of the underperformance is in line with other past years of poor performance. Materials and Energy have been the main drivers.

The Major Trend Index remained firmly in positive territory for the week ended August 26th, dropping 0.02 points to a reading of 1.22. Net equity exposure in both the Leuthold Core and Global Funds remains unchanged at its recent level of 61%.

The Major Trend Index rose 0.01 to a ratio of 1.24 based on data through the week ended August 19th. This is comfortably above the MTI neutral zone of 0.95-1.05 and supports our tactical funds’ 60% exposure to equities.

The Major Trend Index increased 0.01 to a ratio of 1.23, based on data for the week ended August 12th; a big gain in the Economic category was mostly offset by small losses elsewhere. Overall, we’re impressed that the MTI has been able to carry as far as it has into the positive zone despite the increasing resistance provided by both the Intrinsic Value and Attitudinal categories.

The S&P 500 gained 3.7% in July. Based on the 1957-to-date valuation metrics presented, downside to its historical average widened by about 3% from last month’s –19% reading.

Our AdvantHedge gross composite fell 7.0% in July, lagging the inverse performance of the S&P 500 (+3.7%), Russell 2000 (+6.0%), and NASDAQ (+6.7%).

Select Industries gross composite gained 4.5% in July, outpacing the S&P 500 gain of +3.7%.

Following a short stay in the neutral zone, the MTI ratio popped back up to positive territory in early July.

The Major Trend Index jumped 0.08 to a new recovery-high ratio of 1.22 based on data for the week ended August 5th; the improvement was led by another big gain in the Momentum/Breadth/Divergence category. All sub-models relating to Financial industry groups were upgraded in the past week, and Low Volatility stocks’ grip on market leadership has weakened somewhat over the past several trading days. Both are viewed as market positives.

Tactical equity exposure raised to 60-61%, however, our enthusiasm is tempered by high domestic valuations and other evidence that the expansion and associated 7 1/2-year bull market are very mature.

A military coup was staged in Turkey on Friday, July 15th, but it was quickly suppressed. The damage, however, was done.