Latest Research

Improving cyclical leadership could be signaling that the bear market is in its final stages. In 10 of the 12 past bear markets, cyclical stocks turned up prior to the conclusion of the bear.

Adding a new equity group holding in Automotive Retail. This gives us about a market weight in the Consumer Discretionary sector, our most significant exposure in several years.

The broad market continued to trace out a labored recovery from the July lows, yet the day to day performance volatility continued to keep many market participants from getting too comfortable with the trend.

Think we’ve never seen such turmoil in the financial sector? Back in 1986-1995, the S&L crisis wiped out about half of the federally insured thrifts (from 3234 to 1645).

Materials sector has fallen fast and hard in our GS Score rankings and is now the worst rated. Still see further downside based on valuations and technical factors. No, we do not think the underlying commodities can outperform while the stocks fall.

Small cap out performance so far in 2008 is baffling. Earnings growth has been weak relative to large caps and valuations are still excessive. Interestingly, EAFE Small Cap Index is underperforming, while its U.S. counterparts are doing well.

Analyst estimates for oil stock earnings never seem to fully capture the impact that the price of oil has on their earnings.

Presidential election-year performance vs. non-Presidential election-year performance…. Searching for an intersection that doesn’t exist!

In the past, Wall Street activity slowed in August as professionals headed for the beach. However, the “Hyper-connected Era” has changed all that, as evidenced by higher market volatility in recent years during July and August.

Initiating new portfolio positions in Health Care Facilities and Pharmaceuticals. Former Generic Pharma portfolio holdings now being rolled into the broader Pharmaceuticals group.

Inflation is peaking and the GS Scores did a great job signaling an exit from the Industrial Metals play. Commodities were hit hard in July.

Price momentum now indicating there may still be one more leg down in this bear market. Typically, price lows come after momentum lows, and a new momentum low was hit in mid-July. Similar analysis of NYSE New Highs/New Lows data supports this conclusion.

While we continue to believe in our market bottoming thesis, we thought it may be useful to examine those periods when the P/E ratios continued to fall to the 10x to 12x earnings levels.

Today’s takeovers appear to make better strategic sense, and are coming at the hands of companies with good credit ratings, strong balance sheets, and good cash positions. This month’s “Of Special Interest” looks at the possibility that a rebound in M&A activity could heal an ailing stock market.

More bubble talk. Crude oil prices are following the same pattern as the tech bubble in the late 1990s. However, Energy stocks have not become nearly as extended as Tech stocks were in the late 1990s. Also, Energy stocks have shown far superior earnings growth compared to Tech.

In our equity portfolios we have avoided much of the Financial sector’s collapse, but unfortunately suffered a hit on the Regional Bank stocks over the past two months. The group faded to Neutral in our GS Scores this month and has been deactivated.

Well, now it’s officially a bear market. But readers should realize that since bear markets typically decline 28%, the bear is likely at least two-thirds over.

Comparing and contrasting our traditional Major Trend Index and the Global Major Trend Index. Both are now Neutral, but the Global version is showing better valuations and worse technical scores.

Why have Small Caps been outperforming Large Caps since January?