For the third month in a row, there were no changes to the signals provided by Northlake’s thematic models. Northlake’s Market Cap model remained on a large cap signal for November, and the Style model remained neutral between growth and value. Current client positions in the S&P 500 (SPY) will continue to be held for large cap exposure, while Style exposure will remain evenly split between the Russell 1000 Growth (IWF) and the Russell 1000 Value (IWD).

The underlying indicators of the Market Cap model moved more strongly in favor of large caps. In fact, all but one of the sixteen indicators now recommend a large cap signal. The strong signal reflects recent concerns about economic data and recent stock price action. Large caps are less risky than small caps, and perhaps investors are reducing risk after a volatile October.

The underlying indicators of the Style model are as close to neutral as possible. Exactly half of the indicators are signaling growth and half are on value. Furthermore, the groups of internal indicators and external indicators are each evenly split between growth and value. Last month, the internal indicators slightly favored growth while the external indicators recommended value. October was a challenging month for many high-flying growth stocks, which helps explain why the internal indicators shifted back toward value. Despite the rough stock performance in October, many growth stocks reported solid earnings and guidance. This is reflected in the external indicators shifting back toward growth. The Style model’s ongoing neutral signal is a microcosm of the debate surrounding whether value can finally begin to outperform growth as we move into the tenth year of the current bull market.

SPY, IWD, 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