From today's update: "The Leuthold Core Fund's Major Trend Index improved to High Neutral due to better economic readings and bullish technical indicators, overriding high valuations and elevated sentiment. As a result, net equity exposure in the Core fund increased to 55%." 60-65% would be "normal" for them. At base, investors are in a mood to party regardless of the price of the ticket so the model says play along (but watch).
Inflation has ticked down to 2.4% YOY. The fed funds rate was cut, and mortgage rates promptly rose as wannabee buyers flooded the market. The S&P and Dow hit all-time highs. DJT (the stock) is surging. The percentile ranking for ARK Innovation ETF in the last five years is: 1 / 100 / 100 / 1 / 100 with two firsts and three lasts averaging out to 99th percentile for the five-year period. ARKK investors are leaving very slowly. Western Asset investors, not so much: the firm saw $28 billion in outflows in the past month.
Comments
How can I subscribe to these updates? Or is this all behind a paywall? Tks
90% of Leuthold's output are statistical analyses and 10% are portfolio commentary. They've got an interested project, for example, on quality factor investing and the funds that seem to excel at it.
Their reference to ”bullish technical indicators” is interesting. Some here will fondly remember @Flack, a prominent contributor more than a decade ago (FundAlarm) who based his investing largely on technicals - being a virtual encyclopedia on the matter. Sometimes got into fascinating debates with the non-believers.
Interesting that Leuthold is based in Minnesota. I subscribe to James Stack’s “InvestTech” (based in Montana) and find his reasoning similar to what was quoted from Leuthold. Stack’s been recommending a very conservative position of 55% invested and 45% cash / T-Bills for many months. Like Leuthold, he finds some bullish technicals but is wary longer term - citing issues with valuation and investor euphoria.
For fun … I had AI pull up some common ”Technical Indicators” (hastening to add that attention to technicals represents but one small aspect of Leuthold’s overall investment approach.)
- Head and shoulders: A technical indicator with a chart pattern of three peaks, where the outer two are close in height, and the middle is the highest … is a chart formation that predicts a bullish-to-bearish trend reversal.
- Inverse Head and Shoulders: This pattern is the reverse of the Head and Shoulders, indicating a potential bullish reversal.
- Triangle Pattern: A continuation pattern that forms a triangle shape, often signaling a consolidation or a pause in the trend.
- Ascending Triangles - The resistance line intersects the breakout line, pointing out the entry point. The ascending triangle is a bullish trading pattern.
- Spinning Top: A candlestick pattern characterized by a small real body with long upper and lower shadows, indicating indecision or a lack of clear direction.
- Wedge Pattern: A pattern that forms a wedge shape, often signaling a continuation of the trend or a reversal.
- Double Top/Double Bottom: A pattern that forms two peaks or troughs with roughly equal heights, indicating a potential reversal or continuation of the trend.
- Rounded Bottom/Rounded Top: A pattern that forms a smooth, curved shape, often signaling a reversal or a continuation of the trend.
- Inverse Hammer/Bullish Engulfing: Candlestick patterns that indicate a potential bullish reversal or a strong upward move.
- Bearish Engulfing/Gravestone Doji: Candlestick patterns that indicate a potential bearish reversal or a strong downward move.
Good Cheer!
@David_Snowball
Are you referring to the following article?
https://research.leutholdgroup.com/section/of-special-interest/articles/2024/09/23/quality-checked.24908
Thank you very much.