Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.

The steepening move in the yield curve is prevalent across many countries and is primarily driven by higher inflation expectations.

Until now, this group has been out of favor per our quantitative disciplines for the entirety of the bull market, making its newfound attractiveness particularly interesting. Even an 80% return in 2013 hasn’t brought relative performance back to levels achieved during the previous bull market.

The Dow Transports and Dow Utilities both triggered major sell signals in May when their 50-day moving averages fell below their 200-day moving averages… known by some as a “Death Cross.”

Even though the ten EM sectors are growing at a much stronger pace than corresponding U.S. sectors on the Top-Line, only a small margin exceed the U.S. in terms of EPS growth.

The “cash on the sidelines” is a Supply/Demand argument that we’ve struggled with even in the most bullish of times; every purchase of a security is matched with a sale. But even taking the argument at face value, current holdings of retail investors and mutual fund managers suggest that the cash left the sidelines long ago.

A new position in Drug Retail was added to the Select Industries Portfolio in April. The latest update to the Group Selection (GS) Score showed improvement in several factor categories which pushed the overall score back to Attractive.

While Large/Mid Cap Biotechnology companies are boasting rising profitability, better cash flows, and stronger drug pipelines, the Small/Micro Cap Biotech firms, in general, have little tangible to show and valuations may be above the comfort zone.

Conventional breadth measures show the U.S. market to be healthy, with key indexes confirming the April 24th S&P 500 high. However, sector leadership is behaving in a way that’s consistent with an approaching market top.

At a time when social media stocks are the rage, stodgy “Old Tech” has quietly tacked on a 20% gain in the 13 months since the social media peak, while the NASDAQ Internet Index is still a bit below its March 2014 high. Yet, “Old Tech” P/CF remains below the level of 1995.

How will today’s bull market be viewed through the eventual clarity and objectivity of hindsight? We’ve pulled together several still frames that we think best capture the essence of this historic run.

New S&P 500 bull market high on April 24^th confirmed by all manner of traditionally leading indicants.

The common driver behind the sharp reversal of many recent asset class trends is the unwinding of the ECB QE trade.

Despite this sector’s extended outperformance, we think this trend may persist in the near term as Discretionary industry groups look increasingly attractive within our group work. Keeping an eye on the Fed Funds rate is key, however.

While our disciplines continue to turn up enough bullish evidence to keep us cautiously positive toward stocks, we are seeing troubling signs by cyclicals (especially the Transports) and junk bonds.

Poor performance in 2014 by two typical victims of Fed tightening—Consumer Discretionary and Small Caps—corroborated our argument that “tapering” is tightening.

Our long term view towards China is positive (especially relative to other large EM countries), but short term, we see signs of the A-shares segment overheating and caution against near term corrections.

From a price action perspective, the drop below the 50-day moving average and the failed higher-high, higher-low pattern are not supportive of an imminent up-turn in interest rates.

A look at profitability trends at the broad sector level; only Utilities and Telecom Services are experiencing levels below their long-term medians.

The Major Trend Index fluctuated within a tight band during the last five weeks and closed the week of April 3rd at a mildly positive 1.09, down from 1.11 at the end of February.