Latest Research

The S&P 500 lost 0.4% (price only) in February.

Select Industries gross composite gained 1.5% in February and is down 6.7% YTD. Global Industries lost 0.6% in February and is down 8.5% YTD.

MTI Negative; Net Equity Exposure Increased To 44%

Momentum reversed in February, primarily due to rallying Materials stocks. Value and Profitability both performed well.

Despite the improvement in market sentiment, U.S. bond yields were dragged lower by their international counterparts.

The market’s latest infatuation with bonds was driven by grave concerns that the weakness in energy and manufacturing sectors might be spreading to the U.S. economy as a whole.

We believe a short term rally is more likely and recommend a neutral stance towards credits at this point.

Given more attractive valuations, we tactically upgraded investment grade Corporates to Favorable.

The second month of Q4 2015 earnings reports registered an Up/Down Ratio of 1.12—up from the post- financial crisis low of 1.11 last quarter. With 51% of the observations in February, the “Up” count edged out the “Down,” but barely.

The Ratio of Ratios bounced off last month’s multi-year low (4% Small Cap discount) but still sits firmly below its Small Cap median, which is a premium of 4%.

Small Cap Growth stocks have gotten off to a rotten start in 2016—down almost 12%. On a relative basis, the segment has also been lagging Small Cap Value—underperforming by 9% since last July.

February turned out to be a month of trend reversals.

We use our Group Selection (GS) Scores to identify the potential for a catalyst, and to gauge the health and future performance potential of those groups out of favor by analysts.

We see solid prospects for potential industry growth; consolidation and a full-blown industry evolution have resulted in group constituents having more in common than ever before.

New developments have lifted sentiment toward oil and Energy names, but we caution bottom-fishers to be mindful of risks. The fundamentals in the oil patch do not yet support strong oil prices going forward.

Highlighting Automotive Retail, Education Services and Insurance Brokers.

The Major Trend Index ticked down 0.01 point to a ratio of 0.86 using data for the week ended February 26th. Losses in our sentiment and valuation work offset the technical improvement that had stemmed from recent market gains. The economic category stabilized following a multi-week slide, although there’s no sign the current earnings recession has begun to abate. 

For the second week in a row, the Major Trend Index gained 0.02 points to close at a ratio of 0.87 using data for the week ended February 19th. We believe a bear market rally remains underway and have positioned the Leuthold Core and Global Funds with net equity exposure of 42%, compared with levels near 32% in the third week of January.