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Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors

Sep 09 2024

Earnings Momentum - Surprise Bump

  • Sep 9, 2024

The Up/Down ratio reads 1.32—this is the highest “two-month” figure we’ve seen over the last two-and-a-half miserable years. The 3,600 firms reporting in August had a standalone ratio of 1.40—which is, historically, a decent level of higher YOY EPS.

Sep 09 2024

Small Cap vs Mid Cap vs Large Cap

  • Sep 9, 2024

The Small Cap discount widened once again, as the long-running theme of Large Cap leadership over Small Caps resumed in August. The S&P 600 SmallCap index lost 2%, while the Equal Weighted S&P 500 gained 2%.

Sep 09 2024

Growth vs Value vs Cyclicals

  • Sep 9, 2024

Royal Blue Growth (+4%) was our best performing style box in August. That gain has pushed this large-growth proxy’s median P/E ratio to 42.8x—the most extreme observation since the contemporary peak of 45.0x set in December 2021.

Sep 09 2024

Other Market Undercurrents

  • Sep 9, 2024

Seven of eleven underlying sectors outperformed the overall index in August (+4.5% versus +2.3%, respectively). However, those seven subsets make up just 48% of the S&P 500. The +1% returns contributed by Info Tech and Communication Services (which comprise 39% of the S&P 500) highlight just how much the index depends on those two tranches of firms.

Aug 06 2024

The Slump Continues

  • Aug 6, 2024

The Up/Down ratio reads 1.13—this marks the 10th consecutive quarter of below-average “one-month” results, with eight of those coming in at a level previously reserved only for economic recessions (including the current reading).

Aug 06 2024

Small Cap vs Mid Cap vs Large Cap

  • Aug 6, 2024

The S&P 600 (+10.7%) outperformed the Equal Weighted S&P 500 (+4.4%) in July—the widest margin in three-and-a-half years (these two indexes are the best proxies for this vignette). Our Ratio of Ratios, in turn, shrank by a similar margin.

Aug 06 2024

Growth vs Value vs Cyclical

  • Aug 6, 2024

Russell 2000 Value gained 12.2% for July and was easily the best performing style box. As we move into August, YTD results across all style boxes look much more uniform.

Aug 06 2024

Mag 7 Haircut

  • Aug 6, 2024

Confidence was shaken in the bulletproof Mag 7 as only Tesla and Apple (the YTD laggards of the esteemed group) escaped what was otherwise a fairly uniform 5-6% haircut. Those seven magic names shaved 70 bps off the S&P 500’s narrow monthly advance (but still account for half of the index’s YTD performance).

Jul 08 2024

Standing Taller

  • Jul 8, 2024

The Up/Down ratio reads 1.20—the best result for the last month of a quarterly reporting period since Q4-21. This figure towers over the last two years’ readings like Danny DeVito towers over a class of second graders. Tacking on other quarterly observations and you quickly see how “short” the contemporary Up/Down ratio has been.

Jul 08 2024

Small Cap vs Mid Cap vs Large Cap

  • Jul 8, 2024

It took an ugly relative performance month (S&P 500 +4%, S&P 600 -2%) to break out of the 21%-27% twelve-month range for Small Cap discounts. The Small Cap value trap that began five years ago shows no signs of letting up.

Jul 08 2024

Growth vs Value vs Cyclicals

  • Jul 8, 2024

Our mega-cap proxy—Royal Blue Growth—was (once again) the only game in town for Q2. That size tier outperformed the others by 8-9% and was the lone subset on the positive side of the performance ledger.

Jul 08 2024

Additional Factors

  • Jul 8, 2024

The Equal Weighted S&P 500 has underperformed the Cap Weighted structure in 13 of the last 17 months. From May through June, the EW/CW performance gap was 6.3%. Since 1990, we’ve seen two consecutive months of worse EW relative performance just twice—both were in the throws of vicious bear markets: October-November 2008 (-6.6%), and February-March 2020 (-6.4%).

Jun 07 2024

Better But Still Bad

  • Jun 7, 2024

The Up/Down ratio is 1.18. This is the best “two-month” figure since February 2023 (Q4-22 results) but still way below the long-term average. We’re still far from what we’d call pervasive YOY EPS growth.

Jun 07 2024

Small Cap vs Mid Cap vs Large Cap

  • Jun 7, 2024

Our Small Cap discount has hardly budged this year, staying between 23%-26%. Looking at the best proxies for this vignette (the equal-weighted S&P 500 and the S&P 600), that range makes a lot of sense. Those two indexes are up 5.7% and 5.1%, respectively, through the first five months of 2024.

Jun 07 2024

Growth vs Value vs Cyclicals

  • Jun 7, 2024

Our Leuthold Deep Cyclical group continues to have an excellent 2024. This basket of 30 economically sensitive names (NVDA happens to be one of them) is up 15% YTD.

Jun 07 2024

On The Wings Of NVDA

  • Jun 7, 2024

Nvidia’s +27% return in May means that this chip company now has a similar market cap and index weight as Microsoft and Apple (NVDA was less than one-fifth the size of AAPL just 18 months ago). In May, Nvidia contributed a little over one-quarter of the S&P 500’s return. For the first five months of 2024, the firm’s 121% gain has subsidized one-third of the index’s YTD performance.

May 07 2024

Recession-Like Figures Continue

  • May 7, 2024

The Up/Down ratio is 1.02. This survey of firms, both large and small, continues to tell us that YOY EPS growth isn’t (and hasn’t been) pervasive—despite an economy that, in the aggregate, has remained remarkably resilient.

May 07 2024

Small Cap vs Mid Cap vs Large Cap

  • May 7, 2024

It’s been a year since our Ratio of Ratios matched its pandemic-era maximum discount for Small Caps, at 36%. Since then, the relationship between the two multiples has gone decidedly nowhere, staying in the SC discount range of 22-28%.

May 07 2024

Growth vs Value vs Cyclicals

  • May 7, 2024

Three of the last four years have offered some very divergent returns between the Growth and Value style boxes across all market caps—a 30% spread hasn’t been uncommon. Just over one-third of the way into 2024, there has been little variance between the two styles.

May 07 2024

Additional Factors

  • May 7, 2024

One of the few bright spots for the index in April was Google’s post-earnings jump. The firm held on to most of those gains and ended the month with an 8% advance. This outstanding relative performance catapulted the company back into the 4% Club for the third time in its history. This also marks the first time that four companies have simultaneously shoehorned their way into the 4% Club.