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We examine the factor category strength behind Food Retail & Distributors, Homebuilding, and Water Utilities.

The semiconductor industry is a theme among our most highly-rated groups. Currently both the Semiconductors group (design and manufacture semiconductors) as well as its suppliers, Semiconductor Equipment, rate Attractive.

Value was the only factor category that worked during July. Being the one factor that currently offers rising interest rate exposure, Value has performed inversely to every other category for most of 2016.

The demand for safe spreads remains strong and we maintain our Favorable view on these bonds.

We expect the search for yield to continue in the near term and favor Higher Quality credits within fixed income.

We find ourselves in the twilight period where the impact of a rate hike might be waning, while the potential election-year impact might be gaining more influence.

After a handful of failed attempts to breach the 2,130 closing mark set in May of 2015, the S&P 500 finally set a batch of new all-time highs in July. Alphabet +12%, Microsoft +11% and Apple +9% added more than $142B to their market caps.

Large Cap Value and Small Cap Growth finally joined the rest of the segments in positive territory for the YTD. With the market rally, Value stocks are now significantly overvalued on a historical basis.

With Small Caps outperforming in July, our Ratio of Ratios bounced off its 13-year low. Small Caps are now selling at a 2% valuation discount relative to Large Caps using non-normalized trailing operating earnings.

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).