Northlake’s Market Cap and Style models continue to reflect a broadening bullish stock market trend.  The Style model has shifted to neutral after one year at a growth signal.  This reflects continued strength in economic growth and improved performance of value sectors like industrials, finance, and energy.  The Market Cap model continues to recommend small cap, making it five straight months at either mid or small cap.  Northlake has long held that the data and statistics support a broader stock market advance.  Our models reflect our opinions, and recent market action shows much better breadth.  In fact, during March, the growth-heavy NASDAQ had the lowest return among the major market indices, trailing small and mid cap, international, and value.  Northlake is encouraged by the improved stock market breadth and believes it is a good sign for our outlook for further gains in the stock market by yearend.

The shift in the Style model is broad-based among the economic, interest rate, and technical/trend indicators reflecting economic growth that continues to outperform expectations and the broader advance in stocks that began in earnest in February.  The Market Cap model’s small cap signal remains a weak one and could shift back to mid cap next month.  As a result, we are sticking with large cap exposure in the Style model.  One half of client positions following the models held in the Russell 1000 Growth (IWF) will be sold with proceeds reinvested into the Russell 1000 Value (IWD).  Clients using Northlake’s Market Cap model strategy will maintain holdings in the Russell 2000 Small Cap (IWM) for the third consecutive month.

Clients using thematic strategies but not following Northlake’s models are already positioned consistent with the latest model signals.  We have maintained exposure to small cap, value, and international for many months.  We also have held sector exposure to industrials, financials, and health care.  These strategies are broadly diversified and have exposure to the growth-dominated NASDAQ and S&P 500.

IWM, IWF and IWD 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.