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The Major Trend Index fell 0.01 to 1.02 in the week ended September 12th, with a substantial drop in the technical category offsetting gains in three other areas. This work remains within its 0.95-1.05 neutral zone, and we continue to target net equity exposure of 55% in the Core and Global Funds.

After four weeks of  inflows, domestic equity ETF flows turned slightly negative. Cash inflows continue at a steady pace into foreign focus ETFs and mutual funds.

              The Major Trend Index rose 0.01 to 1.03 for the week ending September 5th, with small fluctuations across the five categories mostly cancelling one another out. The MTI has been within its Neutral band (0.95 to 1.05) since the week ended August 1st, supporting a more defensive stance towards the stock market. Both the Leuthold Core and Global Funds have targeted net equity exposure of 55% since August 4th.

U.S. demographic and economic trends coupled with meaningful expansion of the insured population should continue to support Health Care Facilities.

The weaker pattern of MTI readings since August 1st supports the reduced net equity exposure in our tactical portfolios (targeting 55% net equities since early August).

Economic expansion and industry consolidation have created tighter capacity and improved performance for North American Airlines. Other parts of the globe are experiencing planned capacity expansion, a trend that will affect the entire industry.

 We additionally compare factor results YTD to that of 2013 YTD; shift to Large Caps should have staying power.

The S&P 500 and NASDAQ Composite moved to new bull market highs in early September, but our quantitative work continues to warn there’s a least a short-term speed bump ahead for the stock market.

While the lagging action of Small Caps should be monitored, persistent strength in most stock market breadth measures makes it difficult to argue the stock market has entered a true “distribution” phase.

Stocks might look superficially cheap relative to bond yields, but they continue to offer little appeal in an “absolute” valuation sense.

We believe the first move toward tighter policy occurred in January when the Fed first reduced the rate of its monthly bond purchases by $10 billion to $75 billion.

With commodity prices falling in recent months and consumer prices in the Eurozone almost flat over the latest 12 months, we’re surprised that inflation fears continue to climb the list of U.S. investor worries.

Share repurchase activity in the S&P 500 dropped off in the second quarter, after first quarter buybacks challenged the all-time high levels seen in the second and third quarters of 2007 (a window of history that should ring a bell).

Surging bond prices in Europe have opened a yield gap with the U.S. This premium favors more dollar strength in the coming months. In equity markets, the short term volatility in the dollar is a mildly bearish signal.

Statistically, stocks perform a bit better in an environment of dollar strength than dollar weakness. The best stock market action, however, occurs when there’s relative calm in the forex markets.

While a new secular bear market in commodities commenced in 2011, we still look for tactical opportunities in commodity-oriented stocks to arise from time to time.

Gold market fundamentals appear superficially bullish...

Auto Parts & Equipment has performed about twice as good as the market during the last 19 months. Margins still elevated, see more room for upside.

We define four states of the stock-bond relationship based on the directions of stock price and bond yield movements; stocks fear tightening more than true risks, while bonds are more responsive to Risk-On and Risk-Off.

New ECB stimulus should support risky assets near term but caution is warranted.