Northlake’s Style model flipped from Growth to Neutral for June.  The Market Cap model continues to register an extremely strong large cap signal.  As a result of the new Style signal, one half of client holdings in the Russell 1000 Growth (IWF) have been sold and proceeds reinvested into the Russell 1000 Value (IWD).  Client positions in the S&P 500 (SPY) will be held at least one more month.

The Growth signal worked well over the last few months with IWF easily outperforming IWD as big tech stocks continue to be the best performers on Wall Street.  The shift to neutral this month is the result of another month where the internal and external indicators conflict.  The internal indicators have been supportive of value for a few months reflecting the generally good economic data for the U.S.  This morning’s employment report for May further reinforces domestic economic strength.  The internal indicators, composed of technical, trend, and momentum measures of stock prices, strongly favor growth thanks to the leading performance of growth stocks over the past months.  The big rebound in Facebook and Google and Activision Blizzard being most representative within Northlake’s individual stock portfolio.

Given the current model readings, we expect large cap to remain the preferred Market Cap signal for at least another month, probably longer.  The neutral reading from the Style model could go either way.  Most likely, the next change is going to be based on whether growth stocks continue to provide market leadership or value moves to the forefront.

SPY, 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