Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
Our latest ratio of 1.05 is awful. The improved earnings picture for the aggregated S&P 500 has not trickled down to the average firm. In this earnings vignette, where one firm gets one vote, EPS growth is still very hard to come by. That fact, and the narrowness of the 2023’s market strength are certainly linked.
The market’s preference swung back to the familiar mega-cap names in August—even as the index broke a winning streak of five consecutive months. Better in up markets and better in down markets is a tough combination to beat. Nvidia (+238%) has contributed as much to S&P 500 performance as Apple (+45%) in 2023, despite starting the year with one-fifth of AAPL’s market cap.
During the last two months, the Equal Weighted index has beaten the Cap Weighted version by 1.3%. That’s not much of a turnaround considering the 10.6% advantage for the top-heavy SPX from February to May. The seven largest firms (28% of the index weight) have contributed two-thirds of this year’s 20% gain in the S&P 500.
Our latest Up/Down ratio is 1.06. This “three-month” figure is a step back from Q4-22’s ratio of 1.19, and lands in the range of the abysmal readings from the first three quarters of 2022 (1.02-1.07). The current figure also doesn’t have the high look-back figures that 2022’s numbers had to overcome.
Apple’s 9% gain in June helped it to become the first firm to reach a $3 trillion market valuation. For perspective, the combined market cap of the S&P 400 and S&P 600 is roughly $3.5 trillion. AAPL’s weight in the S&P 500 also reached a new high of 7.72%—which means it is a bigger slice of the index than the combined weight of the Materials, Real Estate, and Utilities sectors.