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Our broad-based measure of the stock market’s wellbeing improved in June, gaining some 500+ points. However, this work still remains decidedly negative on balance.

For most of us, essentially all of the positive 1987 performance has come in the first three months of the year, with most of that in January and February. Still, our equity model was up 5.2% in the second quarter.

Almost any way you cut it, the U.S. stock market is historically very overvalued. Only by comparisons with Japan and perhaps Singapore, can U.S. stocks be viewed as relatively attractive.

The bond market entered June with a sharp one day sell off and then spent the best part of the month edging higher. However, in the last week or so, bond prices drifted lower in a relatively dull market.

If you haven’t done so already, I highly recommend you spend some time with the June 1987 20th Anniversary issue of Institutional Investor. Here, we are reproducing one of those remembrances, as Don Weeden recalls his earlier battles with the New York Stock Exchange.

Doing the MTA and FAF conferences in May....The polite nods and smiles are waning as the Japanese come to increasingly believe they are scapegoats for America’s economic woes...Even though we think the currency play in the Australian dollar may be played out for a while, the high yields in themselves are very attractive. All in all, we find Aussie bonds to be a comfortable investment area these days.

Our composite Major Trend Index has continued to deteriorate and is decidedly negative. It is no longer just the Intrinsic Value measures that are warning us of trouble ahead.

In terms of sectors and groups, May was an interesting month, even though the popular averages ended the month unchanged.

Most of last month’s questions have been addressed in other sections of this month’s publication, but here are some ‘‘leftovers”.

For those who have survived, things are looking up down on the farm. Land prices are down through most of the Midwest, close to matching the previous great farmland bear market, 1920 to 1932. We think farmland is bottoming out. If you want to invest in farmland we give you some advice.

For the time being, negative pressures seem to have subsided for the bond market. We don’t think the decline in bond prices is over, but June should allow for a little rest and rehabilitation on the part of the players.

Sound like a tall order? This is what the DJIA must achieve to match the total return from a 20-year zero T-bond over the next 20 years.

Thoughts from the airplane…Two pictures of gold…Is finding values in this market “Mission Impossible?”

April couldn’t have been much crueler. Even with the rally from near panic lows, long T-bonds lost 6-7 points for the month, as did long municipals. Corporates held up a little better, dropping only three or four points.

When the closing bell sounded on April 30, the market averages were down very little from the month before. To the casual observer, it might appear to have been a dull quiet month. But to those on the floor, in front of a quotron, or even reading the daily financial pages, it was anything but.

It was a wild and wooly, hairy and scary market in April, even though the popular averages ended the month only about 1% below where they began. However, the NASDAQ and Value Line measures each declined about 3% over the month.

Three questions that seem to be coming up quite frequently these days: Is it time to buy electric utilities? What do we think about the telephone utilities? Inflation sensitive stocks - what do we do now?

Last year, two original earnings momentum evaluators were introduced in this publication. Currently both are giving off constructive readings for 1987 and perhaps beyond. Unfortunately, history seems to indicate this is not necessarily a big positive for stock prices.

A Giant Step Backward: Hoggish House’s Pork Barrel Propensity for Speedy Spending… Gold stocks are exploding, but gold itself is only edging higher. What is going on?

A month ago, this publication recommended clients start moving toward a defensive posture. Our cautious stance toward the stock market is essentially unchanged from last month. If anything, we have become more cautious.