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

Mar 08 2025

Earnings Momentum: Broader But Slower Growth

  • Mar 8, 2025

The Up/Down ratio reads 1.47—the best “two-month” figure since Q4-21 (1.54). This vignette seems to be telling us we’re finally experiencing a broadening in YOY EPS growth and an economic recession isn’t in the offing.

Mar 08 2025

Valuations: Small Cap Vs. Large Cap

  • Mar 8, 2025

Our Ratio of Ratios continues to be locked in a range as the preference for Large Caps persists. And who can blame the market? S&P 600 trailing EPS has shrunk 30% over the past three years compared with an EPS expansion of 10% for the S&P 500.

Mar 08 2025

Leadership Dynamics: Growth/Value/Cyclical

  • Mar 8, 2025

Over the last year, returns between Growth and Value have been very similar within cap structures: Royal Blue Growth +14%, RB Value +17%: Mid-Cap Growth +15%, Mid-Cap Value +12%; Small-Cap Growth +6%, Small-Cap Value +8%.

Mar 08 2025

Other Market Undercurrents

  • Mar 8, 2025

The Trump Bump may have peaked on February 19th with a post-election S&P 500 gain of 6.7%. By the end of the month, that had dwindled to +3.4%. The Russell 2000 has fared much worse, now down 4% since the November 5th close. Contrast that with 2016’s post-election surge where the S&P 500 was up 11.2% and the Russell 2000 gained 16.5% from election day through February 2017.

Feb 06 2025

Up/Down Earnings: Best Tally In Three Years

  • Feb 6, 2025

The Up/Down ratio reads 1.68—the highest “one-month” figure since way back in January 2022. Out of the depths of recessionary-like numbers just four quarters ago, the ratio continues to rise and is now approaching its 42-year average.

Feb 06 2025

Valuations: Small Cap Vs. Large Cap

  • Feb 6, 2025

After an initial post-election surge, hopes of a small-cap Trump bump seem to be fading. Since election day through the end of January, the Equal Weighted S&P 500 (+1.9%) has essentially matched the S&P 600 (+2.1%).

Feb 06 2025

Leadership Dynamics: Growth/Value/Cyclical

  • Feb 6, 2025

Mid-Cap Growth (+6.4%) was the best performing style box of January. Since the end of September, MC Growth has outperformed MC Value, +15% versus +2%, respectively. Style leadership now seems to be evident in the Mid-Cap space but it’s still ambiguous among Large and Small Caps.

Feb 06 2025

Other Market Undercurrents

  • Feb 6, 2025

On the last Monday in January, China’s newest and seemingly wildly efficient AI assistant, DeepSeek, begged the question, “Maybe we don’t need all of these chips to run AI?” That day, Nvidia and Broadcom each cratered -17%, the largest daily loss for both since the March 2020 panic. Recall that those two firms provided a little over a quarter of the S&P 500’s +25% return in 2024.

Jan 07 2025

Trend Still Positive

  • Jan 7, 2025

The Up/Down ratio is 1.36—the best “final” quarterly figure we’ve logged for this vignette since Q3-21. After two years of readings that are normally associated with recessions, YOY EPS growth has certainly become more common thus far in 2024, with three quarters’ reports in the books.

Jan 07 2025

Valuations: Small Cap Vs. Large Cap

  • Jan 7, 2025

Our Ratio of Ratios ends 2024 in the middle of its range for the year (21-29% Small Cap discount). We enter another new year with this vignette advising that Small Caps can be purchased at a steep discount to Large Caps. Of course, this study said the same thing in January 2020, 2021, 2022, 2023, and 2024.

Jan 07 2025

Leadership Dynamics: Growth/Value/Cyclical

  • Jan 7, 2025

Over the past two calendar years: Royal Blue Growth +73%, RB Value +29%. The P/E multiple for our RB Growth segment now sits a tick above is previous contemporary high of 45.0x (Q4-2021). In the aftermath of that high point three years ago, the P/E multiple collapsed to 30.1x over a span of three quarters.

Jan 07 2025

Other Market Undercurrents

  • Jan 7, 2025

The Equal Weighted and Cap Weighted S&P 500 turned in eerily similar absolute returns for the past two years. The real shocker being the yawning, but nearly identical relative gap between the two from year to year (12.4% and 12.7%). The 29% performance void is the largest 23-month gap we can calculate since 1990. The next closest being April 1998 to March  2000 (27.9%).

Dec 05 2024

Baby Steps Higher

  • Dec 5, 2024

With the second month of Q3 reporting complete, the ratio of up-earnings to down-earnings was an improvement over the same period last quarter and the highest “two-month” figure in two years. Still, this vignette is hovering in the grey zone of results that aren’t deemed recessionary but are decidedly below average. 

Dec 05 2024

Small Cap Vs. Large Cap

  • Dec 5, 2024

Noting the five-percent monthly return gap between the S&P 600 (+11%) and the Equal Weighted S&P 500 (+6%), the expectation was that our Ratio of Ratios would jump out of its recent range. That was not the case, as both of the trailing P/E ratios soared a uniform 9% from October to November.

Dec 05 2024

Leadership Dynamics: Growth/Value/Cyclical

  • Dec 5, 2024

The median P/E ratio for SMID Value stocks is finally back to its 42-year average. This area of the market is still a relative bargain compared to everything else.

Dec 05 2024

Other Market Undercurrents

  • Dec 5, 2024

The index was not the star of the November surge, as a decisive election result and the possibility of another corporate-tax cut via the GOP sweep turbo charged the S&P 600 (+11%), regional banks (KRE +15%), speculative tech (ARKK +26%), and TSLA (+38%). The rotation and Mag 7 weakness led to a surprisingly small win for the Equal Weighted Average over the Cap Weighted measure.

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%.