There are no changes to the signals from Northlake’s Market Cap and Style models for August.  The Market Cap model continues to recommend mid cap and the Style model remains on a neutral reading between growth and value.  With no changes to this month’s signals, clients following the models will continue to own the S&P 400 Mid Cap (MDY) for Market Cap and have monies evenly split between the Russell 1000 Growth (IWF) and the Russell 1000 Value (IWD) for Style.

The factors underlying the Market Cap model were quite stable for August.  Only one of the internal technical/trend indicators shifted from large cap to small cap.  This indicator is reflecting better recent performance for small caps compared to large caps.  The Market Cap model is positioned pretty firmly in mid cap and seems likely to hold there for at least one more month barring dramatic change in market trends or economic data during August.

The Style model remains solidly in the neutral zone between growth and value.  There was some underlying movement in the indicators, however.  Two internal factors shifted from value to growth following a big rebound in the performance of growth stocks during July.  The rebound was driven by strong earnings reports from major companies including Google, Facebook, and Microsoft.  One external indicator moved the other direction, in favor of value.  The external indicators mostly favor value now as despite weak GDP growth in the first half of the year, there has been in improvement in a wide range of reported economic data for the U.S economy.

The Market Cap model performed well in July and continues to outpace the benchmark S&P 500 so far this year.  The Style model would have been better off with a pure growth recommendation for July but still managed to match the benchmark for the month as it has done so far this year.

MDY, IWD, and IWF are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.