There are no changes to the recommendations from Northlake’s Market Cap and Style models following the November update.  The Market Cap model favors Mid Cap for the 4^th consecutive month and the Style model remains neutral on growth vs value for the sixth straight month.  This type of consistency is typical as the models are designed to catch major trends rather than short-term trades.  The model signals are consistent with our favored themes that we employ for clients that do not use our models. As a result of the latest update, clients holding the S&P 400 Mid Cap (MDY), Russell 1000 Growth (IWF), and Russell Value (IWD) in our models strategy will see no changes.  Similarly, we will sit tight with our investments in industrials, financials, health care, international developed and emerging markets.  These investments and the models are consistent with Northlake’s forecast for improved stock breadth that offers similar performance for most stocks and themes.

Looking under the hood at the models, the Market Cap mode has a small shift toward small cap based predominately on inconsistent but improved breadth over the best few months.  The Style mode has movement toward both growth and value.  The internal technical and tend indicators moved toward growth, while the external economic indicators moved in favor of value. Improved breadth is evident, but large cap technology growth stocks still are the market leaders. The economic indicators moving in favor of value is reflection of continued strength in the US economy.  Although it is not a factor in either of our models, the Citi Economic Surprise index has moved sharply from negative to positive over the past few months, reflecting the ongoing strength in the economy.

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