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The Major Trend Index rose 0.03 to 1.15 in the week ended October 11th, a bullish reading that continues supporting our above-average commitments to the stock market.

The Major Trend Index fell to 1.12 in the week ended October 4th, down 0.04 for the week and down 0.09 from two weeks earlier. However, we do not expect to make significant changes to net equity exposure.

In Q3 the High P/E Tier was the best performing subset, up 7.6%. It is also the best performer YTD (+23.7%), with the Middle P/E Tier (+22.9%) and Low Tier (+21.7%) just behind.

The S&P 500 gained 3.0% (price only) in September. Based on the valuation metrics presented in the table below, the S&P 500 has 9% downside to reach its historical average. The S&P Industrials (excludes Utilities and Financials) now has 22% downside to reach mean valuation.

The U.S. market rates anywhere from mildly overvalued to very overvalued relative to other developed markets. Foreign markets might be the last remaining pocket of yield that isn’t overvalued.

YTD net flows have remained in positive territory by about $10 billion.

On a YTD basis, the spread between these two indices continues to expand, with the Equal Weighted index now outperforming by more than 4%.  Consumer Staples is the most expensive sector among Large and Mid Caps, while Health Care is most expensive in Small Caps.

The Major Trend Index rose 0.04 to 1.16 during the month of September, remaining in a range we consider moderately bullish.

All three cap tiers of Growth also now ahead for the YTD. Growth stocks are moving towards their his- torical average valuation levels, with Mid Cap Growth now being overvalued. All Value stock segments continue to be solidly overvalued.

Core, Global, and Asset Allocation Portfolio overviews.

With all three months of Q2 earnings reports in, the 1.28 ratio is much stronger than Q1, but remains below the 1.51 historical average ratio.

U.S. Investment Grade Corporate Bonds: Favorable, U.S. High Yield Corporate Bonds: Neutral, U.S. Municipal Bonds: Neutral

Inflation at both consumers’ and producers’ level is still modest. A drawn out government shutdown and debt ceiling debate will hurt the economy, which could further push out the taper timeline.

Our AdvantHedge composite lost 2.6% in September, outperforming the inverse performance of the S&P 500 (+3.0%), the Russell 2000 (+6.4%), and the NASDAQ (+5.1%).

 Construction & Farm Machinery, General Merchandise Stores, Consumer Electronics, and Home Entertainment Software are the Attractive groups that selected to discuss this month.

There was little turnover in the GS Scores this month and no group deactivations. With minimal capital to work with, we added selectively to existing group holdings.

Despite continued question marks surrounding the effects of Health Care Reform, sentiment seems to have shifted for the better, and a number of broad industry drivers are trending in a promising direction. This group currently has three categories rating Excellent in our domestic group model.