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2013 and 2014 mark the first two years since 2007 in which equity fund nominal annual cash inflow tallies have outweighed those of bond funds.

The Major Trend Index rose 0.01 to a still-neutral 1.00 in its final weekly reading for 2014. Three of the five MTI categories declined on the week, with the Intrinsic Value work moving to a new negative extreme for this bull market. But these modest losses were more than offset by a gain of +46 points in the Momentum/Breadth/Divergence category.

Contrasting last week’s trends, most broad fund categories recorded net cash inflows this week. Domestic equity ETFs brought in the largest weekly net cash inflow of the year for the category.

The Major Trend Index rose 0.02 to 0.99 in the latest week, remaining within the neutral range where it’s been contained since late October. The background of inflated U.S. valuations, complacent sentiment and deteriorating internal market action continues to worry us, but the MTI’s trend-following elements have remained healthy enough to prevent us from moving to a more defensive posture. Net equity exposure in both the Core and Global Funds remains unchanged at 50%.

Negative cash flows were the trend across major fund subsets in the latest week; bond ETFs were the only category to buck the trend.

The Major Trend Index dropped 0.02 to 0.97 in the latest week, led by a steep drop in the Momentum/Breadth/Divergence category.

The Major Trend Index dropped 0.03 to 0.99 in the latest week, remaining within the neutral zone in which it’s resided since the end of October.

Domestic equity ETF net cash inflows continued this week at a decelerated pace; the large cap subset, however, saw net cash outflows.

The collapse in oil prices has brought down inflation expectations dramatically. Inflation will likely be the single most important driver of interest rates in the next 6-12 months.

Perhaps the most important is the credit channel; the substantial curve flattening that happened recently in anticipation of the Fed hike next year has made lending standards tighter for small businesses.

Amidst the Energy sector tumult, the Oil & Gas Refining & Marketing group is the exception.

Continued strength in equities offsets the weakness in credits and commodities to arrive at an essentially flat reading.

Our AdvantHedge gross composite lost 0.8% in November, outpacing the inverse performance of the S&P 500 (+2.7%) and the NASDAQ (+3.7%), but not the volatile Russell 2000 (+0.1%).

Select Industries gross composite gained 3.8% in November and is now up 16.7% YTD.

We increased equity exposure back above 50% in mid-November as a result of the MTI returning to Neutral.

Record issuance and oil-related weakness combined to drive the spreads wider but we remain Favorable on these bonds for now.

The S&P 500 gained 2.5% (price only) in November.

Domestic equity ETF net  cash flows have been positive for the past five of six weeks, while domestic equity mutual fund net flows have been negative in four of the past five.

A new theme emerging within our GS Scores—Retail related industry groups are flocking to the upper rankings of the scores.

We don’t yet know whether our second-half adjustments to equity exposure will prove premature or just plain wrong. Our tactical funds remain positioned with below-average net equity exposure of about 50%.