Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
S&P 500: An Equal-Weighted Win
The Equal Weighted average catapulted ahead of the Cap Weighted measure in December to capture the annual crown for the first time since 2016. However, owning the “biggest of the big” proved to be the best play, yet again. The average return of the largest 25 firms in the index has beaten both the Cap- and Equal-Weighted measures each of the last seven years.
The average return of the largest 25 firms ended the month flat. For the first time in 2021, this helped propel the Cap Weighted measure past the Equal Weighted average in the YTD race. The relative gain (+15.5%) enjoyed by the Equal Weighted index over the Cap Weighted measure from 8/31/20 to 5/28/21 has now been more than halved in the last six months.
Tesla zoomed 44% higher in October and became the newest firm to reach $1 trillion in market cap. Tesla is now valued at 6.25x the combined weight of Ford and General Motors even though the young upstart sports just one-third of either’s revenue. TSLA and MSFT contributed one-fourth of the S&P 500’s 7% October gain.
The S&P 500’s stunning recovery off the COVID-panic market bottom hit another milestone in mid-August—a 100% price gain from its March 23, 2020 closing low. The quickest “double” from a bear-market low in the index’s history was still six- to seven-months slower than the “doubles” experienced by the Russell 2000, S&P 400, and the Nasdaq Composite.