Latest Research

Impressive rally did not alter Negative status of Major Trend Index. S&P 500 beat 90% of sectors in April. Earnings holding up well in Q1, but margins likely to shrink as the year progresses.

Market volatility 1997 to date well above 1992-1995 levels and also above median levels 1957 to present...characteristic of transition years and bear markets.

Index fund assets approaching $78 billion, 6% of U.S. focus fund assets... Year to date, index fund flows now account for about 14% of domestic total.

Mutual fund investors less enthusiastic as they learn stock market is not a one way street. Mutual fund investor speculation monitor remains at low levels.

Bonds as attractive Risk/Reward substitutes...disguise them with fictional names such as Bondo Ltd., etc.

Narrowness in the stock market was very evident in April, as the DJIA’s 6.3% gain was better than 70 of the 78 sectors we track (90%).

Human behavior demonstrates that individuals as a group are risk averse…studies of investor behavior have yielded some interesting findings. Also, Japanese low interest rates in themselves have not yet converted caution and pessimism into confidence and optimism.

Big cap earnings momentum is best and seems to be reaccelerating. Small cap earnings lagging by a bigger margin.

Economic expansion long in the tooth...Fed working to slow down the economy...Inflation cool...U.S. rates very competitive with foreign yields...strong dollar should continue to stimulate foreign bond buying.

Major Trend turned negative March 24th...Clients notified via Interim Memo. Bull market topping out or possibly already has. Market breadth measures signaling significant market deterioration.

The squeeze is on. Lack of corporate pricing power, higher borrowing costs, rising labor costs and the higher dollar will eventually squeeze profit margins. Look out for earnings shortfalls, while analysts catch up to a change in trend.

Bonds a good return alternative to stocks. Fed will help put the brakes on the economy while current yields seen to already discount another bump-up in rates.

Market volatility 1997 to date well above 1992-1995 levels and median levels 1997 to present.

U.S. focus equity mutual funds’ cash reserves is now almost as high as back in late 1990 and early 1991 (the last major market low).

Equity Mutual Funds registered $1 billion in net redemptions in latest week. March net inflows down from February but still at strong levels considering weak new supply.

The four March changes in DJIA components shifted sector weightings for the index, most significantly in Energy, Financial, Healthcare and Technology.

Proportionately, equity investment professionals have the most to lose when the Great Bull Market ends. But are investors really aware of their own potential stock market risks?

We plan to replace the Semiconductors with a new 8% holding in Classic Value. Banks still dominate this screen.

Breadth improved in March, with 41% of the sectors outperforming both the S&P 500 and the DJIA. During the first two months of 1997, only 18 of 71 sectors were able to outperform these measures.

Not a hedge fund, but a disciplined quantitative program that is always 100% short.