Models Stable for November

Northlake’s models continue to favor mid cap and remain neutral on growth vs. value. The models recommendations and underlying factors reflect an outlook for good market breadth and continued moderate economic growth. This outlook is consistent with our broad diversification for client portfolios that use thematic strategies but do not follow our models. For portfolios using the Market Cap and Style models, we will hold current positions in the S&P 400 Mid Cap (MDY), the Russell 2000 Growth (IWF), and the Russell 2000 Value (IWD).

There was not a lot of change in the Market Cap model. The technical and trend, or internal indicators, continue to favor large cap, reflecting the leadership of large cap tech stocks. The external indicators that reflect economic activity are a split decision. This reflects ongoing moderate growth in the economy. The Style model showed more movement this month. It looks poised to shift to growth next month, driven primarily by the internal technical and trend indicators. The models influence our thinking across all our thematic strategies primarily through our analysis of the underlying indicators that drive each model.

MDY, IWF, and IWD are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is the majority-owner and President of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.