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The second month of Q4 earnings came in with an Up/Down Ratio of 1.54, just above the historical “two month” average of 1.53.

As the market rallied in February, the S&P 500 Equal Weighted Index (+5.2%) handily outperformed the Cap Weighted S&P 500 Index (+4.3%).

Growth Outperforms Value In February.

Small Caps are selling at a 20% valuation premium relative to Large Caps (23% last month), using non-normalized trailing operating earnings.

Most mutual fund and ETF categories saw net cash inflows in the latest week.

The Major Trend Index jumped 0.06 last week to a five-month high of 1.21. We covered a tactical 2% short position, and the Core and Global Funds are positioned fairly aggressively, with net equity exposure of 65% and 63%, respectively. 

Estimated net cash flows for bond mutual funds registered positive for the first time in four weeks ($1.5 billion). YTD this $3.3 trillion fund genre is barely hanging on to positive net cash flows ($0.9 billion). In mid-February of each of the past two years, bond mutual funds had already collected more than $40 billion in net inflows. We continue expecting net cash outflows for bond mutual funds in the new year.

The Major Trend Index remains on its extended bullish streak, closing up 0.03 to 1.15 for the week ended February 14th.

The Major Trend Index rose 0.03 to 1.12 in the week ended February 7th, but it remains on the low end of its positive range.

Estimated net cash flows for bond mutual funds registered positive for the first time in four weeks ($1.5 billion). YTD this $3.3 trillion fund genre is barely hanging on to positive net cash flows ($0.9 billion). In mid‐February of each of the past two years, bond mutual funds had already collected more than $40 billion in net inflows. We continue expecting net cash outflows for bond mutual funds in the new year.

YTD net cash flows for bond mutual funds are back in negative territory, while domestic equity mutual funds hang on to positive net inflows. Equity ETFs had another rough week; YTD U.S. focus equity ETF net cash outflows are registering at nearly $32 billion.

GICS recently announced their first revision since June 30, 2010, which goes into effect on February 28th.

January could be a month that disrupts the current trend, but one month is not enough time to merit a changing of the guard.

Currently, the Unattractive range of our GS Scores is characterized by two themes, commodity-oriented groups and high dividend groups.

Twenty eight months after purchase it still ranks Attractive, but the industry fundamentals have changed.

In addition to impressive factor readings, we like the fundamental trends in this space.

Consumer Discretionary sector weightings sank among all three market tiers, as this segment led the market lower in January. Health Care and Utilities sector weightings increased, as both outperformed for the month.

The Equal Weighted Index has outperformed the Cap Weighted Index in seven of the last nine months.

Small Cap Growth Outperforms (On Relative Basis) In Down Month