When we introduced this thematic equity group in September 2012, we projected that it was poised to deliver above average returns. These companies have enjoyed many advantages atypical of most other industries, and performance-wise, this group did not disappoint. A large subset of the theme, Data Processing & Outsourced Services, is rated Attractive by our GS Scores, and has been a portfolio holding for 50 months.

For the third consecutive year (thus far), quantitative factors worked best within the Materials sector. Energy also saw success as the decline in oil hurt the same stocks as in 2014. Factors were least effective in Health Care and Telecom.

Our interpretation of the current Fed stance is that it has shifted from “hike if the data and the market support” to “hike unless the data and the market perform poorly.”

The wreckage is beginning to look interesting and—with our cautious stance on the stock market—it would be fun to be bullish about something. Both our GS Scores and intuition suggest it’s still too early.

The stock market rally has carried far enough to flip some of our trend-following work bullish, lifting the Major Trend Index to a low-neutral reading. The improvement prompted an increase in asset allocation portfolios’ net equity exposure to 42% (up from 36% previously).

Despite one of its worst five-day performance stretches in early October, the Momentum factor bounced back nicely and performed well the rest of the month.

As expected, our VLT Momentum algorithm triggered a “low-risk” cyclical buy signal on crude oil in late October, only the 11th buy signal in the past 30 years. This algorithm was originally designed to identify low-risk entry points into the stock market, but we’ve found it useful with other assets as well.

MSCI will soon announce the results of its semi-annual index rebalance and, for the first time, overseas-listed Chinese companies will be included in the MSCI Emerging Market and China Country Indexes.

A strong dollar and low commodity prices are major forces dragging down EM currencies across the board.

Over the past three months the Tech sector has strengthened in our work, as it’s risen back to the #3 position. In line with our disciplines, we increased the Select Industries Portfolio’s Tech exposure via the addition of a new, high-ranking group: Technology Distributors.

Advertising has been in the top rankings of our Group Selection (GS) model for several months.

Major Trend Index remains decisively negative at 0.72. The “market action” category is the primary culprit behind this bearish tally, but we’ve also seen the Economic category deteriorate in recent months and would expect this trend to continue. This sequence is typical: Market action leads economic trends (and, we would argue, is a major cause of those trends).

Foreign valuations experienced nowhere near the expansion enjoyed by U.S. stocks during the latest bull market, but their cheaper valuations rarely seem to inoculate them from outsized losses during corrections and bear markets.

The traditional economic indicators are no longer as relevant as people think, and China’s condition may not be as bad as most fear.

We revisit this long-held industry group and explain our positive outlook going forward.

Our research shows that the best years to “Play The Bounce” are generally ones in which the stock market is heading down into the fourth quarter. We won’t rule out an allocation to the Bounce strategy in the weeks ahead.

There are three Ds that are ruining the Fed’s little rate hike plan: the Dollar, Disinflation, and the Decline in wealth effect.

The Short Interest Ratio performs well as a factor; on both the long and short sides.