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

May 05 2023

Earnings Momentum

  • May 5, 2023

Our latest Up/Down ratio is 1.17. Given the optimistic tone of the earnings season and lower hurdles of 2022, that reading is disappointing. This wide-view vignette is telling us that few firms are growing their EPS.

May 05 2023

Small Cap vs. Mid Cap vs. Large Cap

  • May 5, 2023

Our Ratio of Ratios is kind of getting out of hand. The latest reading matches the March-2020 pandemic low. A recession—which only small caps seem to be priced for—will probably be needed to see a turning point in this relationship.

May 05 2023

Growth vs. Value vs. Cyclicals

  • May 5, 2023

Large Caps—both Growth and Value—were the only winners in April. The S&P 500 has outperformed the Russell 2000 by nearly 12% in just the last two months.

May 05 2023

Additional Factors

  • May 5, 2023

The index’s trading range spanned only 120 points in April—or a bit less than 3% of the previous month’s close. The S&P 500 has a monthly trading range average of a little over 9% since the start of the pandemic and, to find a month calmer than April, you’d have to go all the way back to July 2019.

Apr 06 2023

Earnings Growth Still Relatively Scarce

  • Apr 6, 2023

Our Up/Down ratio reads 1.19—Q4’s “three-month” result is somewhat higher than the range of the previous three quarters’ final numbers (1.02-1.07). Still, the current reading ranks in only the 22nd percentile of observations in our 39-year history.

Apr 06 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Apr 6, 2023

March’s huge Large-Cap outperformance sent our Ratio of Ratios tumbling to its lowest level since the start of the pandemic. Measured from the contemporary relative-strength peak of two years ago, the S&P 500 has a total return of +7% compared to -17% for the Russell 2000.

Apr 06 2023

Growth vs. Value vs. Cyclicals

  • Apr 6, 2023

After a brutal 2022, Growth outdid Value in Q1 by a uniform 8% across all three market-cap tiers. That strength reopened the valuation gap between the two styles, which had been narrowing prior to March.

Apr 06 2023

Additional Factors

  • Apr 6, 2023

AAPL (+12%), MSFT (+16%), GOOG (+15%), NVDA (+20%), and META (+21%) all posted tremendous results in March, while the average S&P 500 stock was down 1%. Those five mega-firms, representing 20% of the index weight, were responsible for 80% of last month’s gain and led to the largest monthly performance gap between Cap Weighted and Equal Weighted (4.6% spread) since March-2020, when the disparity was a 5.7% spread.

Mar 07 2023

Whittled Down by Pinched Margins

  • Mar 7, 2023

Our Up/Down ratio reads 1.27. That is noticeably higher than the other three “two-month” figures of 2022, but still well below the historical average. Given the dour direction of reported- and estimated earnings, it’s a bit surprising that we’re seeing even a small pop in the results.

Mar 07 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Mar 7, 2023

We’re now three years removed from the 2020 COVID market panic, when, over the course of four weeks, the S&P 500 and Russell 2000 lost 30% and 40%, respectively. That action sank our Ratio of Ratios to levels not seen since the height of the Tech Bubble. The Small-Cap discount, at present, is not too far removed from 2020 lows.

Mar 07 2023

Growth vs. Value vs. Cyclicals

  • Mar 7, 2023

Within the Mid- and Small-Cap tiers, Growth seems to be forming a relative-strength bottom versus Value. However, in our Royal Blue space, where Growth peaked much later, no evidence of a bottom has yet developed.

Mar 07 2023

Additional Factors

  • Mar 7, 2023

As the market slumped in February, we saw more follow through from the three mega-cap dogs of 2022: TSLA, NVDA, and META all gained a uniform 18% for the month. Those three stocks, just 4.6% of the S&P 500’s weight, are responsible for nearly half of the index’s modest +3.7% YTD total return.

Feb 06 2023

Earnings Momentum

  • Feb 6, 2023

Our Up/Down ratio kicked off Q4 earnings season with a 1.57 reading. This “one-month” ratio is by far the highest of 2022, thus far. As usual, January reporting was very light, so don’t read too much into the numbers.

Feb 06 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Feb 6, 2023

In January, the Russell 2000 had its best month relative to the S&P 500 since last February. Another Small Cap head-fake? Or maybe the start of a fresh run, like September 2020-February 2021? (i.e., Russell 2000 +46%, S&P 500 +13%.)

Feb 06 2023

Growth vs. Value vs. Cyclicals

  • Feb 6, 2023

Both Growth and Value Small-Cap style boxes gained 10% in January’s rally. However, SC Growth remains well in the rearview mirror since its relative strength peak in September 2020: Small Cap Growth +8% versus Small Cap Value +60%.

Feb 06 2023

Additional Factors

  • Feb 6, 2023

The S&P 500 had an almost biblical upheaval to start 2023. The “last were first” and the “first were last.” In January, the 100 worst performing stocks of 2022 had an average return of +16.1% while last year’s 100 best performers posted +1.7%.

Jan 07 2023

Looking For A Bright Spot

  • Jan 7, 2023

Our Up/Down ratio ends the Q3-22 earnings season with a pitiful reading of 1.07—very near the previous two quarter’s “final readings.” This vignette hasn’t had much longer stretches at such low levels (outside the Financial Crisis). Perhaps a sign we’re in the latter innings of an EPS downturn?

Jan 07 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Jan 7, 2023

Our Ratio of Ratios ends 2022 at a two-and-a-half-year low. Like 2019, 2020, 2021, and 2022, Small Caps seem primed for outperformance in 2023. Some kind of economic turmoil (perhaps underway) is probably needed to jolt them back into favor.

Jan 07 2023

Growth vs. Value vs. Cyclicals

  • Jan 7, 2023

At the end of November 2022, Royal Blue Value saw its largest twelve-month-rolling return gap (43%) over Royal Blue Growth since 2001.

Jan 07 2023

Additional Factors

  • Jan 7, 2023

We wrap up 2022 with the S&P 500’s only positive performance quarter for the year—ending the longest quarterly losing streak (three quarters) since the Financial Crisis (six quarters). The year also drew some comparisons to the deflation of the Tech Bubble, as S&P 500 Value (-5%) demolished S&P 500 Growth (-29%) by the widest margin since Y2K.