There were no changes to the April signals from Northlake’s Market Cap and Style models. The Market Cap model continues to recommend Mid Cap (MDY) and the Style model still prefers Growth (IWF). As a result, client positions in MDY and IWF will be held for at least another month.
There was minimal movement in the underlying indicators for both models. The growth signal did get a little weaker but remains solidly in growth mode. The model’s stability reflects a flattish stock market performance in March with little disparity among the returns for the S&P 500, the S&P 400 Mid Cap, and the Russell 2000 or the major growth and value indices. It also reflects relatively stable economic data with the US and global economies recovering and growing but at a below average pace for an economic recovery. What all that really means is that little new data hit the models that varied with data accumulated over the prior few months. We are still in a sluggish economic recovery with easy money. It is a good environment for publicly traded corporations but a difficult environment for many individuals. The primary risk to stocks remains that corporations can only grow profits and cash flow so far without help from end demand.
Performance from the models last month was pretty good but did not add a lot of value. Both models produced returns just barely in negative territory while the S&P 500 lost about three quarters of one percent. MDY fell about one quarter of one percent, SPY lost three quarters of one percent, and IWM fell 1.6%. On the Style side, growth was barely negative and finished ahead of not only the S&P 500 but also the value index.
Disclosure: MDY and IWF are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts. Northlake is registered investment advisor with the State of Illinois. Filings can be found at www.sec.gov.