Latest Research

Small Caps are selling at a 3% valuation discount using non-normalized trailing operating earnings. This figure is very close to our contemporary low set at the end of January.

Adding in the second month of Q1 2016 earnings reports, the Up/Down Ratio now sports a 1.07 reading. May was another net “down” month with a stand-alone reading of 0.96.

We’re fully cognizant that it’s not a “textbook” time to raise exposure, however, outside of valuations, the balance of our MTI work suggests the market still holds some cyclical appeal.

The Major Trend Index pushed further into bullish territory based on data through last week, rising 0.09 points to a three-year high 1.22 ratio. Improvement in both the Momentum and Economic categories drove the gain. In addition, there were positive developments based on yesterday’s month-end prices that will be captured in the next MTI reading.

The Major Trend Index remained in moderately bullish territory, falling 0.03 points based on data through last week. A 75-point loss in the Momentum/Breadth/Divergence work was the only outsized move among the five indicator groupings. This category, however, remains the strongest pillar underlying the MTI with a current net reading of +440.

Positive forces may be transient. Be wary of EM’s high correlation to commodities and Chinese stocks.

If this year’s interest in the “Sell In May” phenomenon is any indication, there remains plenty of skepticism surrounding the market’s recent rebound. The good news is that the “Sell In May” play has been weakest during presidential election years.

The global economic expansion will enter its eighth year later this summer, yet the world’s central bankers continue to fight deflationary demons as if it’s 2008.

The correction failed to meaningfully “reset” any long-term valuation measures, hence, we don’t view the current environment as having much investment merit, but rather, primarily speculative appeal.

Donald Trump’s all-but-certain Republican nomination is somehow a fitting capstone to a stock market era in which it’s paid to be provincial.

Small Cap valuations may look better on a relative price-to-book basis, but we still believe their Normalized P/E ratios will suffer further compression before Small Caps reclaim the leadership baton.

Leadership, breadth, and corporate credit all staged intermediate-term breakouts, rising above their respective 40-week moving averages. In this formation, historically, S&P 500 annualized return is +15%.

Despite recent improvement in some inflation measures, we are not convinced the war against disinflation has been won. The risk of being too early on the inflation call far outweighs the risk of being too late.

While breadth and leadership accompanying the upswing off February lows have been impressive, the most outstanding feature of this advance might be the confirmation provided by high yield bonds.

While our MTI became bullish in mid-April, we can’t rule out that the rebound from February lows could be an impressive bear market rally. However, this rally sports impressive technical credentials.

The Major Trend Index reverted to its bullish zone in the week ended April 15th, following almost ten months in which the work resided in either neutral or negative territory.

We recently purchased the Building Products group in our Select Industries Portfolio. Strong trends in existing U.S. home sales and the remodeling market, coupled with slow but steady growth in new construction, should bode well for future Building Products group performance.