Latest Research

Equity Exposure Increased To 42% In Early November.

The Major Trend Index rose 0.05 to a neutral reading of 0.96 in the final week of October, following a 2 1/2-month period in the negative zone.

Our interpretation of the current Fed stance is that it has shifted from “hike if the data and the market support” to “hike unless the data and the market perform poorly.”

A reversal in momentum, driven by the oil and commodity stocks’ rebound, caused investors to take gains from Health Care positions. We’re still big fans of Health Care and think recent weakness is more of a correction within a sector bull market than the start of a full-fledged bear.

Small Cap Premium Drops To 4%

The wreckage is beginning to look interesting and—with our cautious stance on the stock market—it would be fun to be bullish about something. Both our GS Scores and intuition suggest it’s still too early.

Based on the four key features of the current macro environment: global disinflation, monetary conditions divergence, an extended bull market, and sub-par economic performance, 1998 ticks all the boxes.

The stock market rally has carried far enough to flip some of our trend-following work bullish, lifting the Major Trend Index to a low-neutral reading. The improvement prompted an increase in asset allocation portfolios’ net equity exposure to 42% (up from 36% previously).

Question: What will you do if the Major Trend Index returns to its bullish zone?

Despite one of its worst five-day performance stretches in early October, the Momentum factor bounced back nicely and performed well the rest of the month.

This bull market has appeared to be on shaky technical ground before, only for concerns to be swept aside. This time, we think it’s different.

Transportation stocks have confounded conventional wisdom about their presumed relationship with oil during the past three years.

As expected, our VLT Momentum algorithm triggered a “low-risk” cyclical buy signal on crude oil in late October, only the 11th buy signal in the past 30 years. This algorithm was originally designed to identify low-risk entry points into the stock market, but we’ve found it useful with other assets as well.

In Q2, NIPA’s EBIT margin fell to a new four-year low, over one point below the early 2012 cycle peak.

One of the drawbacks advantages of tracking so many market indicators is that one can invariably cherry-pick a single measure that supports a given narrative.

MSCI will soon announce the results of its semi-annual index rebalance and, for the first time, overseas-listed Chinese companies will be included in the MSCI Emerging Market and China Country Indexes.

A strong dollar and low commodity prices are major forces dragging down EM currencies across the board.

Over the past three months the Tech sector has strengthened in our work, as it’s risen back to the #3 position. In line with our disciplines, we increased the Select Industries Portfolio’s Tech exposure via the addition of a new, high-ranking group: Technology Distributors.

Growth Edges Out Value As Stocks Rebound