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

Nov 07 2024

Up/Down Earnings: Better, Not Great

  • Nov 7, 2024

The Up/Down ratio reads 1.38—the highest “one-month” figure of the last two years but still below average. More importantly, the ratio has finally broken out of the range that has historically been identified as recessionary.

Nov 07 2024

Valuations: Small Cap Vs. Large Cap

  • Nov 7, 2024

Our Ratio of Ratios currently sits right at the moving average over the past one-, two-, and three-years. This vignette has, and continues to be frustratingly consistent in both its message and range. It’s also a perfect example that “valuation” is not a timing tool.

Nov 07 2024

Leadership Dynamics: Growth/Value/Cyclical

  • Nov 7, 2024

At 43.8x, the median P/E ratio for our Royal Blue Growth segment is still 64% higher than its 1982-to-date average multiple of 26.7x. On the other hand, it is only 14% above its five-year average (38.4x).

Nov 07 2024

Other Market Undercurrents

  • Nov 7, 2024

In October, the Mag 7’s combined contribution to the S&P 500 was 0%—neither adding to, nor detracting from the index’s -1% return. Since the end of June, a market-weighted basket of those seven names has produced +1.8%, while the cap-weighted S&P 500 is up 4.9%.

Oct 05 2024

Earnings Momentum - Positive Direction

  • Oct 5, 2024

The Up/Down ratio reads 1.32—the best quarter-end figure since Q4-21. More firms outside of the mega-cap space seem to be participating in the EPS-growth story for the first time in two-and-a-half years.

Oct 05 2024

Large Cap vs Mid Cap vs Small Cap

  • Oct 5, 2024

Our Ratio of Ratios now sits at the widest Small Cap discount of the last 18 months. The Small Cap advantage generated in July was gradually undone in August and September, with the S&P 400 and Equal Weighted S&P 500 (the best proxies for this study) both ending Q3 with 9% gains.

Oct 05 2024

Leadership Dynamics: Growth/Value/Cyclical

  • Oct 5, 2024

Both Mid- and Small-Cap Value advanced 10% in Q3, easily outpacing all the other style boxes. Yet, since these two segments have been such laggards in this cycle, they’re still the only pockets in our universe with median P/E multiples below their 1982-to-present average.

Oct 05 2024

Other Market Undercurrents

  • Oct 5, 2024

The index ended September with its fifth-consecutive monthly gain and fourth-consecutive quarterly advance. Ten of the last eleven months have been positive, resulting in a 37.4% price gain. A window like this doesn’t come around very often—since the Y2K bubble, the only two runs that can top today’s are the eleven-month periods ending January 2010 (+46%) and February 2021 (+48%).

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%).