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In conjunction with Materials’ solid rise in our sector rankings, we purchased Specialty Chemicals & Gases in the Select Industries Portfolio.

Commentators now label this cyclical advance the “seven-year bull market,” but that won’t be semantically true until the S&P 500 closes above its May 2015 peak of 2130.82.

We’ve boosted equity exposure twice in the past several weeks, fully cognizant that it’s not a “textbook” time to do so.

Our AdvantHedge gross composite fell 2.6% in May, lagging the inverse performance of the S&P 500 (+1.8%) and Russell 2000 (+2.3%), but outperforming the NASDAQ inverse (+3.8%).

Select Industries gross composite gained 2.4% in May, besting the S&P 500 by 0.6%.

Major Trend Index Positive: Net Equity Exposure Increased to 60% Early June

The Leuthold Materials sector jumped five spots to #3 in the June Group Selection (GS) rankings, its highest ranking in eight years and the first reading outside of the bottom four in almost four years.

The dark days of January and February seem but a distant memory. After three positive performance months in a row, the S&P 500 closed out May within spitting distance (1.6%) of its all-time high set almost exactly one year ago.

Our Deep Cyclical group took a breather in May but is still up almost 9% for the YTD. The Mid and Small Cap Value segments have also performed well this year.

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.