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With the first month of Q2 2016 earnings reports in the books, our Up/Down Ratio sports a reading of 1.55. While still well below average, it is head and shoulders above the past five “one-month” ratios.

Actively managed funds have recently underperformed passive indexes. As a result, fund inflows and deposits have favored passive funds.

Based on data for the week ended July 22nd, the Major Trend Index ticked up 0.01 to a new recovery high ratio of 1.15, reflecting mostly offsetting movements within the five indicator categories.

Again driven by a large gain in the Momentum/Breadth/Divergence category, the Major Trend Index tacked on another 0.05 points to land at a moderately bullish ratio of 1.14 based on data for the week ended July 15th.

After two weeks in the high neutral zone, the Major Trend Index returned to bullish territory based on data through the week ended July 8th.

Our AdvantHedge gross composite fell 1.4% in June, lagging the inverse performance of the S&P 500 (+0.3%), Russell 2000 (-0.1%), and NASDAQ (-2.1%). So far in 2016, AdvantHedge is down 6.6% compared to the S&P 500 gain of 3.8%.

Select Industries gross composite fell 3.2% in June, lagging the S&P 500 by 3.5%. YTD, the portfolio is down 3.0%. Global Industries (based on Global Industries, L.P. gross return) lost 4.0% in June and is down 6.4% YTD.

Major Trend Index Neutral: Net Equity Exposure Reduced to 57%

We’ll know soon if the recent dip into “Neutral” was nothing more than a news-driven “whipsaw.” But we want to make clear that the MTI decline reflects more than just the Brexit-related market action.

Market classification is an index rebalance on the country level and generally refers to shuffling countries among three baskets: Developed Markets (DM), Emerging Markets (EM) and Frontier Markets (FM).

Validating results of a prior study, a look at the last four MSCI index rebalances shows that stocks soon to be added outperform from Announce Date to Effective Date, while deleted stocks underperform.

After two rough months moving into 2016, Low Quality stocks rallied and are now leading High Quality stocks YTD. Investors apparently brushed-off the slowdown scare from China, and later the Brexit headlines.

It was thirty-three years ago today that I began my investment career as an equity analyst at The Bankers Life of Iowa (now known as Principal Financial Group). This month, my first as a gainfully employed member of The Leuthold Group’s research team, it seems natural to reflect back as a preface to my new adventure.

The S&P 500 once again remains on the verge of a new bull market high, thanks in large part to the bubble in another asset class: Bonds.

While we don’t see a U.S. recession on a one-year horizon, there are a handful of indicators that may force us to revisit that view—including the two relatively obscure data series shown below.

Sector swings have been wild enough thus far in 2016 that Consumer Discretionary’s relative weakness has drawn little commentary.

Yields on 10-Year U.S. Treasury bonds sunk to an all-time low of 1.37% on July 5th, yet so far there’s been a mysterious absence of contrarians willing to step up to say that “the” secular low in bond yields is at hand.

The divergence between S&P 500 Low Volatility and High Beta Indexes has emerged for the 3rd time in a year. The 3-month performance spread is even more extreme than it had been on the eve of either the August or December stock market air pockets.

Last month we noted that European and Japanese banks were among the worst-looking industry indexes among the hundreds we monitor—and both groups obliged by dropping 15-20% in the last month.