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April 03, 2011
Another Month Favoring Mid Cap and Value
Despite great volatility surrounding events in Japan, Libya, the Middle East, and Europe, the stock market ended little changed in March. Northlake held up very well during the volatility just after the earthquake and tsunami in Japan. As the market rallied into month end, small and mid cap stocks once again asserted leadership, helping Northlake client portfolios finish a strong quarter.
Despite volatility in global events, there was no change to Northlake's Market Cap and Style model signals for April. The Market Cap model continues to recommend Mid Cap, while the Style model still favors Value. The message being delivered by the models remains that the economic and stock market cycles are favorable but we are far enough along in the recovery to warrant having less than maximum risk. As a result of the latest model signals, client positions in the S&P 400 Mid Cap (MDY) and the Russell 1000 Value (IWD) will be held.
Northlake's models continue to send accurate and value added signals. Leading the way again for Northlake clients in March was an accurate signal from the Market Cap model. During March, the Mid Cap signal was quite profitable as MDY gained about 2% against a flat return for the S&P 500.
Mid Cap was favored for the entire first quarter and produced an equally good result with MDY up over 9% versus a gain of less than 6% for the S&P 500. The Style model produced a neutral result in the first quarter, as the quarter long Value signal left client portfolios invested in IWD, which closely tracked the almost 6% gain in the S&P 500.
Disclosure: MDY and IWD are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg's personal accounts. Steve is sole proprietor of Northlake, an SEC registered investment advisor.
Posted by Steve Birenberg at April 3, 2011 10:22 AM in Models
1. with leader apple struggling, do you think we are near a market top
2 what is causing micc and cetv 's surges?
1.DO YOU THINK WE WILL BREAK INTO SIGNIFICANT PULLBACK OR IS THIS SIDEWAYS ACTION ENOUGH OF A CORRECTION FOR NOW
2. WHAT DO YOU THINK OF CETV,CTCM,MICC GOING INTO EARNINGS?
1.DO YOU THINK WE ARE ABOUT TO GO INTO A TRUE DOWNWARD CORRECTION OR DO YOU THINK THE SIDEWAYS ACTION OS ENOUGH OF A CORRECTION FOR NOW
2 WHAT DO YOU THINK OF MICC,CETV,CTCM,AAPL GOING INTO EARNINGS/
I still think another mild correction lies in the near future but the longer we refuse to breakdown the less likely it occurs. I'm still a buyer at 1285 and 1260 on the S&P 500, neither level being a huge drop. As long as the economic recovery remains on track the market should be OK. Some signs of slowing momentum but nothing that would change my view that we finish the year int he economy and stocks better off than we are today.
No opinion on CTCM. I don't follow it closely.
CETV I think is still too early. I don't expect a pviot to the positive out of this quarter. The huge rally in the Euro helps though.
MICC is trying to build a better quality customer base with higher revenue and profit per user. That means slower new sub growth. I think the strategy is smart. But for the stock that is a tricky transition. I think takeover speculation has the stock up and I'm a little worried about a dip lower on earnings but I am staying long.
Apple will probably guide well below consensus built everyone knows it. Google dropped 5% on its earnings. I think that is the worse case for Apple. Better set up for Apple heading into earnings because expectations are more in check. I am also holding Apple, willing to risk some downside for what looks a $450 stock to me.
Posted by: Steve at April 14, 2011 06:26 PM