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While September was a surprisingly strong month, October was just confusing. Year-end cross currents seem to have started early this year. Major Trend Index now just barely in neutral territory with a ratio of 0.95.

Are U.S. “Households” net equity sellers? We don’t think so!

U.S. mutual fund flow less bullish in October (may be seasonal).

In past issues, we have postulated that the next major stock market decline would not precede an economic downturn as it typically has in the past. Rather, the relationship would be coincidental, with the stock market and the economy turning down at about the same time.

Running a fresh “Playing the Bounce” screen at month end netted quite a handful of new names, and a few deletions from our previous screen featured in the October Interim Memo.

Scarce on Wall Street: “SELL” recommendations. Why? Also, The Great American Weight Gain: How can the typical American really consume so much in a single year?

Our earnings momentum studies show some slowing year over year, but not as much as Wall Street seems to believe.

Bonds outperformed stocks over past two months. Most investors not well positioned to take advantage of an extended period of bond’s performance superiority. As inflation threat recedes and economy slows, bonds should continue to outperform.

California’s Proposition 211: a blatant, self-serving enrichment scheme that has negative implications for all of us. Good news for stocks and bonds: likely that the Republicans will not lose the House, and will also retain control of the Senate.

Performance rundowns for The Leuthold Group's equity market sectors (and other measures) ranked by third quarter performance.

September a surprisingly strong month, with 4%-5% gains for most market indices. Significant MTI improvement, but still a ways from Neutral.

Supply/Demand bullish in September. Mutual fund net inflows increase to an estimated $11 billion in September.

May be another sub-par “Playing the Bounce” year. Most equities have already bounced off their lows, so this year's crop of busted stocks looks pretty lean and unusually risky.

While stock is being repurchased through the front door, additional shares are going out the back door for stock options, incentive compensation, and acquisitions.

Bonds (including zeros) expected to outperform stocks over next 6-12 months. Economy should slow by year end (recession in 1997?). Inflation should remain under control.

Conventional Portfolio boosting REIT holdings above the 8-10% core position. New purchases increase REITs to 12% of total assets. Increase viewed as tactical move, NOT an upward revision in core position.

Consumer groups more attractive. “Buy California”, ranked among the top since May, heavily composed of consumer issues.

Conventional Equity Portfolio establishing a new 10% holding in “Oil Equipment & Services”. A play on production and exploration in 1000 “Oil Patch” companies. Does not include 600 major oil companies.

Performance rundowns for The Leuthold Group's equity market sectors (and other measures) ranked by August performance.

Market timing: key to long term timing success is discipline. Politics 1996: the election outcome that minimizes prospects of decisive political action may provide the best market environment.