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Our long term view towards China is positive (especially relative to other large EM countries), but short term, we see signs of the A-shares segment overheating and caution against near term corrections.

From a price action perspective, the drop below the 50-day moving average and the failed higher-high, higher-low pattern are not supportive of an imminent up-turn in interest rates.

A look at profitability trends at the broad sector level; only Utilities and Telecom Services are experiencing levels below their long-term medians.

We recommend staying cautious and exercising patience in the near term.

The low spread cushion/low yield level combination remains. Issuance tapered a bit while net inflows increased.

The final month of Q4 earnings reports registered an Up/Down Ratio of 1.48. If you recall, we entered the final month of earnings with a well above average, two-month ratio of 1.67. On a stand alone basis, March had a very weak ratio of 1.06.

Small Cap Premium Bounces Back To 10%

Growth Continues Run In Q1

S&P 500: Home On The Range

The Major Trend Index fluctuated within a tight band during the last five weeks and closed the week of April 3rd at a mildly positive 1.09, down from 1.11 at the end of February.

The S&P 500 lost 1.7% (price only) in March. Based on the 1957-to-date valuation metrics presented below, downside to its historical average decreased by about 1% from last month’s reading of –19%.

The Major Trend Index fell 0.02 to 1.07 in the latest week, led by moderate losses in the Supply/Demand and Momentum/Breadth/Divergence work. Net equity exposure in both the Core and Global Funds continues to target the 55% level.

The Major Trend Index continues to levitate just above its neutral zone, closing the week of March 20th up 0.03 to 1.09. While this work is not as emphatic as we would like, it remains enough to keep us postured with net equity exposure of 55% in both the Core and Global Funds.

MTI Down 0.01 to 1.06 - Just Above Neutral Zone

The S&P 500 gained 5.5% (price only) in February. Based on the 1957-to-date valuation metrics presented below, downside to its historical average widened by about 5% from the prior month’s reading of –14%.

Using “Analyst Score” to measure sentiment and our Group Selection (GS) Scores, we present what appear to be the most quantitatively Attractive, yet disliked equity groups.

Performance of this thematic group has been strong but the domestic Big Four networks are facing increasing competition overseas. However, there is still a much better growth profile compared to many other industries.

This is the first time in the last year or so the 10-year yield has broken through, re-tested, and held above the 50-day moving average.

Up/Down Earnings: Ratio Still Above Average