Latest Research

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.

S&P 500 profit margins mask the disparate trends taking place on a sectoral level. We dissect those trends with the ten major sectors grouped by five broad themes: Cyclicals, Commodities, Defensives, Interest Sensitives, and Tech/Telecom.

After the last couple months’ strong surge, risky assets are entering a seasonally unfavorable period, with Brexit looming particularly large in the near term. We still favor higher quality credits within fixed income.

Air Freight & Logistics, Commercial Services, and Electronic Manufacturing Services caught our eye this month.

More spread compression is likely ahead.

The first month of 2016 earnings reports registered a pathetic Up/Down Ratio of 1.27. With all the talk of large year-over-year earnings declines, this figure is not much of a surprise.

After nearly seven years of relatively high Small Cap P/E ratios, our Ratio of Ratios has now spent five consecutive months below its long-term average Small Cap premium of 4%.

Value stocks finished ahead of Growth within all three market cap tiers in April. Our Deep Cyclical group, all but forgotten for the last few years, has been on a relative hot streak compared to Large Cap Growth.

Apple lost $84 billion in market cap (roughly the value of Starbucks) for the month of April. The firm now sits 32% below its all-time market cap high of $750 billion set in May of 2015. Apple’s fall, and increased market participation, have boosted returns for the Equal Weighted S&P Average.

Riding a major upswing in the Momentum/Breadth/Divergence category, the MTI moved to positive for the first time in almost 10-months. Tactical Funds’ net equity exposure increased to near 55%.

The S&P 500 gained 0.3% (price only) in April.

Our AdvantHedge gross composite fell 2.6% in April, lagging the inverse performance of the S&P 500 (+0.4%), NASDAQ (-1.9%), and Russell 2000 (+1.6%).