Strength in the Energy sector has been so compelling that our two recent Energy group allocations together now make up a 10% portfolio weight, after having no Energy exposure from June 2013—April.

As a follow up to a 2012 Special Study, we examine the growth in Electronic Payment Systems. Global competition in the industry has significantly heated up, as more countries are setting up their own national payment systems, relying much less on the “big four” global giants.

Although Valuations are a headwind for the asset class, at the stock level our disciplined multi-factor model indicates best opportunities are Small/Mid Caps, and Hotel & Resort-oriented names.

Two short-term, options-based sentiment measures have just swung to levels consistent with near-term difficulty for stocks. Current reading is the most bearish combination of smart-money caution and dumb-money confidence in 10 years.

Current conditions remain cyclically bullish for equities, however, the mathematics don’t support the  “secular” bull market thesis, or those betting that stocks can be propped up by the economic expansion.

Unfortunately, the upswing since early 2009 can be considered immature only from the perspective of its age. The math just doesn’t support the secular case.

Daily stock market volatility has levitated at levels a bit higher than the VIX—in a zone that has historically been “optimal” for short-term performance.

While stock market action YTD has not been quite as “uniform,” the hallmarks of an imminent bull market top are simply not present. The bullish portents apply to intermediate term results, however, they cannot rule out any short-term setbacks (which can appear with no tip-off from breadth or leadership measures).

We identify the “Old Tech” players that will likely reap the benefits from the ever-growing volume of data being generated, stored, and transmitted on line.

Bull markets rarely come to an end prior to the Transports exhibiting weakness. Their outperformance continues this year, returning an impressive +9.9% through June 4th, almost doubling the S&P 500’s +5.2%. We examine the underlying Transport groups and assess which areas are providing the strength to help sustain the Transportation Index’s leadership.

We look at Short Interest Ratios within the S&P 1500 sectors for clues on future market prospects. The Materials sector is one where it has paid to monitor what short sellers are doing (or not doing).

In the very short term, excessive bearish positions have been reversed so there is less downside pressure on interest rates. Over the intermediate term, incredibly low yields in the Euro-zone help cap the U.S. yield.

Surprising strength in the Yen, a drop in commodities, and slightly wider credit spreads pushed up the index. An increase in risk aversion becomes more likely at the current extremely low level. Caution is warranted.

Despite last Friday’s close in the DJIA at cycle highs, the Major Trend Index for the week slipped 0.04 to 1.12.

We are entering the most bearish window among the potential combinations of the Presidential Election Cycle and the Annual Cycle.

The only Energy group rated Attractive, its score has improved for seven consecutive months.

A few measures are suggesting that investor sentiment towards EM has reached a low ebb.

With Small Cap stocks falling to an 11-month RS low while the DJIA hits a new price high, many technicians point to this divergence as evidence the dangerous "distribution" period is underway. We're not so sure.

DJIA eclipsed its year-end closing high; Dow Transports still strong; NYSE A/D Line hits all-time high.