There are no changes to the latest signals from the Mid Cap and Large Cap Growth signals from Northlake’s Market Cap and Style model.  As a result, for at least one more month, client positions following the models will continue to be invested in the S&P 400 Mid Cap (MDY) and either the Russell 1000 Growth (IWF) or S&P 500 Growth (SPYG).

August will mark the sixth consecutive month with mid cap and large cap growth as the recommended investment themes.  This is on the high end of stability for the model signals on a historical basis.  The models are designed to capture major themes and the average holding period is typically four to six months.  The current model readings and underlying indicators were quite stable following the latest data update.

Thus far, the current signals have offered mixed results.  Growth has comfortably outperformed the S&P 500 as investors continue to favor growth stocks in a slow growth global economic environment.  Growth is usually preferred when economic activity is slow since growth companies do not require a tailwind compared to more cyclically sensitive value stocks.

Mid cap and small cap stocks have lagged the gains in the market so far this year (but are still up mid-teens on a percentage basis).  Similar to growth stocks, large cap stocks also tend to outperform in slower periods of economic growth.  The massive gains for internet and technology stocks have also boosted large cap indices relative to small and mid cap indices.  Stocks like Facebook, Google, Apple, Netflix, and Microsoft have massive equity valuations and the S&P 500 and NASDAQ are market cap weighted indices, so the huge gains in these stocks have pushed up large cap indices on a relative basis.

MDY, IWF and SPYG 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