There are no changes to the recommendations from Northlake’s models for March.  The Market Cap model remains on a mid cap signal and the Style model is still recommending growth.  There will be no changes to client positions following the models and currently invested in the S&P 400 Mid Cap (MDY), the Russell 1000 Growth (IWF) and the S&P 500 Growth (SPYG).

Driven primarily by the sharp stock market correction in February, the models showed underlying movement.  The mid cap signal weakened and is set to shift to large cap in April, while the growth signal is even stronger.  Both of these shifts make sense given the new worries about the health of the global economy and the technical/trend impact of the stock market decline.

The Market Cap model reading for March is now in the strong large cap zone.  The models use two-month averages to try to capture major changes in market thematic trends, so for March we are sticking with mid caps.  The Style model has similarly moved further toward growth and now resides deeply into growth territory after coming off its neutral reading last month.

When there are concerns about economic growth and stock market trends turn negative, the models are designed to shift in favor of large caps and growth.  The idea being that these themes (1) have shown a historical tendency to hold up better in market corrections, and (2) that these themes need less help from the economy for companies to achieve positive earnings growth.

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