Leuthold’s Major Trend Index stayed at Low Neutral during the third full week of October. A sharp rotation on Thursday, driven by renewed scrutiny of AI spending, opened the widest daily gap between the cap-weighted and equal-weighted S&P 500 since July 2024. The S&P 500 finished the week down 0.5%, 2.5% below its October 6 high. The average stock outperformed for a third straight week, and the Russell 2000 gained 2%, ending a six-week slide. Market breadth continues to improve but has yet to lift most Technical scores meaningfully. In the Cyclical category, falling Treasury yields have done little to offset a weakening Cyclical/Defensive Ratio and widening credit spreads, and Leuthold sees a downgrade there as “almost inevitable.” Leuthold’s tactical accounts ended the week at 52% net equity exposure. Year to date, most major equity indices have converged at returns of roughly 10–14%.
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