Northlake’s Market Cap and Style models continue to favor midcap and growth following the latest updates.  Client accounts using Northlake’s models will hold the S&P 400 Mid Cap (MDY) and the Russell 1000 Growth (IWF) for at least one more month.

The Market Cap model shifted to midcap last month and the new reading shows a stronger signal.  The growth signals remain solid but have weakened moderately.  The shifts in signal strength reflect improved market breadth during July.  Within the indicators that make up the models, it was the technical and trend internal indicators that shifted toward midcap and value, while the external factors that look at economic and interest rate data held firm for large cap and growth.

Northlake’s models performed well in July when value and small and midcap stocks performed better, keeping up with or outperforming large cap and growth.  Improved breadth also helped Northlake’s Thematic strategies that do not use our models.  These strategies had a good month thanks to good performance from small and midcap, emerging markets, and sector exposure to financials, industrials, and health care.

Northlake has been moderately bullish on the market, but we noted in our midyear Market Outlook in the latest client letters that expanded breadth was important if the rally was to continue.  July was a good start and provides hope that any market correction in the seasonally weaker August through September period proves mild and sets a strong finish to the year.

MDY 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.