The Major Trend Index remains at High Neutral, with Leuthold tactical accounts holding net equity exposure at 51%. Despite the S&P 500 notching a third consecutive Friday at all-time highs joined by the Russell 2000, scores weakened across most categories. Only four of eight bellwether indexes have posted recent all-time highs, the Dow Transports has cooled sharply after a 33% run, and S&P Financials remains nearly four months off its peak. Valuation was downgraded, and Cyclical narrowly avoided a move into negative territory amid higher bond yields and commodity-driven inflation pressure.
The bright spot continues to be earnings, where strong reports and upward revisions are helping keep the S&P 500's forward P/E in check even as other cap-weighted valuation metrics score at or near max negative. With futures markets pricing in an unchanged fed funds rate and a higher probability of hikes than cuts through most of 2027 - the MTI does not support an aggressive stance toward equities following the strongest monthly S&P 500 gain since the pandemic.
Click here to read more of the "Major Trend Index" article.