At its January 20th closing low, the S&P 500’s peak-to-trough decline of –12.7% barely met our definition of a severe market correction (an S&P 500 loss of 12% to 18%). But the behavior of this particular index can be quite sinister during the final phase of a bull market—and during much of the ensuing bear.
For more than a quarter century, The Leuthold Group has tracked hypothetical industry group portfolios composed of the previous year’s “Dreams” (best performers) and “Nightmares” (worst performers). The former is a gauge of a simple, trend-following investment strategy, while the latter is a crude form of industry group “bottom-fishing.” Sticking with tradition, the following pages detail how the 2013 Dream and Nightmare portfolios faired in 2014, and we reveal which industries qualify in the Dream and Nightmare portfolios of 2014.
|Best Performing Industry Groups|
|Industry Group||1 Wk
|Diversified Metals & Mining||5.9%||6.2%||0.0%|
|Computer Storage & Peripherals||5.1%|
But Information Technology rises to the top of the Domestic model, while the trend of Financials domination in the Global model remains intact.
Our Domestic Scores have five Financials groups rating Attractive; these same five industry groups are Attractive in our Global model. In total, seven Financials groups rank Attractive in the Global model, with insurance groups looking particularly Attractive.
In prior issues, we have presented those equity groups that had been displaying the best readings in terms of insider selling/buying. Several clients have expressed an interest in seeing those groups with the most significant levels of insider selling. The following table presents the ten groups with the most pervasive insider selling.
The big stories driving the day to day market action in April continued to be (in no particular order) the future of Fed policy, oil prices, the economy, and escalating tensions with Iran. However, despite the various uncertainties and vagaries regarding the aforementioned, many stock market indexes hit cyclical bull market highs during the month.