Despite a few sharp and short pullbacks for stocks in the third quarter, Northlake’s models were stable throughout with a neutral view on growth vs. value and a preference for mid caps.  There were only small changes in the factors underlying our Market Cap and Style models for October which did not trigger a recommendation change.  Client portfolios using our model strategy will own the S&P 400 Mid Cap (MDY) and the Russell 1000 Growth (IWF) and Russell 1000 Value (IWD) for at least another month.  Our recommendations for thematic strategies that do not use our models also remain unchanged.  Client accounts employing these strategies remain invested in health care, financials, and industrials, and international developed and emerging markets.

An encouraging aspect of the September and third quarter stock market rally is a broadening of participation for different themes.  Large and small cap, growth and value, and U.S. and international all rallied.  Sector performance in the U.S also saw across the board gains.  All major stock market indices are trading above their 50- and 200-day moving averages, a sign that the stock market trend and technical indicators are supportive of bullish action.  Improved breadth has been a major part of Northlake’s market outlook.  We believe it is necessary for the market to sustain its bullish trend.  It also creates more opportunities for new investments in individual stocks and thematic strategies.

Our third quarter client letter should be in client inboxes in about ten days.  It will contain much more detail on recent action in the stock and bond markets and our updated economic and financial markets outlook.

MDY, 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