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Select Industries had no group deactivations again this month, but we trimmed a few groups and added Commodity Chemicals. All group holdings currently rate Attractive. Global Industries had no changes. Emerging Electric Utilities, which we added last month, was the second best performing group in March.

The Major Trend Index remains positive, and our portfolios continue outpacing the market. Net exposure is 65% in both the Core and Global portfolios.

Emerging Market investors are extending their “small” bet down to Small Caps and the Frontier Markets. We discuss potential reasons behind their outperformance.

In December, we declared the market was likely entering into a cycle where High Quality stocks would shine. Unfortunately, market action since then reminds us of the virtue of being humble.

The fifth anniversary of the bull market was met with fanfare, but the launch of the Large Cap leadership cycle in April 2011 is receiving no attention whatsoever.

Margin debt levels are high, but that’s because stock prices are high. The critical relationship is the comparative rates-of-change in Margin Debt and stock prices.

Q4’s margin figure is only one tick below the all-time high of 10.3% set in Q4 2011.

Based on the historical percentages, the bull market should have a minimum of four to six months of life left. But the market has a way of throwing sand in the gears when you think you’ve begun to understand its internal mechanics.

The stock market staged a two-day bearish reversal beginning a few hours after the release of the March employment report, a decline that could —based on the bearish status of a single MTI category (Attitudinal)—carry further before it is finished. But with the S&P 500 (and many other U.S. equity indexes) recording a bull market high as recently as April 2, it’s too early to argue the market top is “in.”

All ten of the S&P 500 sectors recorded a sequential increase in four-quarter trailing net profit margins. But consider where sector margins stand today relative to their 25-year medians. Eight of ten S&P 500 sectors are recording profit margins well above their long-term medians.

Momentum suffered across almost every sector, but it was particularly bad for Health Care and Info Tech. Value factors finally rebounded after losing over the past year.

The short end of the yield curve sold-off to price in an earlier-than-expected rate hike, while the long end rallied as the prospect of tightening reduced longer-term inflation expectations.

Risk assets continued to perform well in March, and our monthly Risk Aversion Index (RAI) fell to near record low levels. We continue to favor high quality credits within fixed income.

High grade credit spreads were unchanged...Risk-on rally for high yield is getting to a mature stage...Tax advantage offered by munis make them attractive.

“Three Month” Up/Down Earnings Ratio Ends Q4 With a Whimper.

Small Cap Premium Bounces Back To 23%

Growth Takes It On The Chin In March.

Cap Weighted Slightly Better In Flat Performance Month.

Important characteristics of the broad sectors of the S&P 500 along with the S&P Mid Cap and Small Cap indices.

The Major Trend Index dropped 0.07 to 1.14 in the week ended March 28th, driven almost entirely by a steep decline in the Supply/Demand category.