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

Jul 05 2019

Earnings Momentum

  • Jul 5, 2019

Our final Up/Down Ratio for Q1 reads 1.12—in line with the earnings recession of 2015-16. Things don’t get any easier for Q2 as those results will be compared to the highest—and final—Up/Down ratio (2.06) of the 2018 earnings bonanza.

Jul 05 2019

Small Cap vs Mid Cap vs Large Cap

  • Jul 5, 2019

Things are starting to get very interesting in this vignette. A sharp move down into Large Cap premium territory is reminiscent of market action in the late 1990s.

Jul 05 2019

Growth vs Value vs Cyclicals

  • Jul 5, 2019

And the nine previous quarters! In an amazing run, our Royal Blue Growth has now outperformed Royal Blue Value for ten consecutive quarters.

Jul 05 2019

Additional Factors

  • Jul 5, 2019

The metaphysical guarantee of a July rate cut chased away the unpleasantness of the May sell-off. In June, the S&P 500 posted its best month since January, and revisited the all-time highs of April and September of last year. Gains were pervasive in June; Google posted the only monthly loss of the index’s largest 50 firms.

Jun 06 2019

Earnings Momentum

  • Jun 6, 2019

Our Up/Down Ratio reads 1.13. This paltry figure is in line with the “two-month” figures registered during the earnings recession of 2015-2016.

Jun 06 2019

Small Cap vs Mid Cap vs Large Cap

  • Jun 6, 2019

Our Ratio of Ratios continues to drill down into Small Cap discount territory that hasn’t been explored since the popping of the dot-com bubble. This vignette was registering a 12% Small Cap premium just eleven months ago.

Jun 06 2019

Growth vs Value vs Cyclicals

  • Jun 6, 2019

Our institutionally-loved Royal Blue Growth stocks were the safe harbor in May; they declined “only” 4.8%. Since the start of 2017: Royal Blue Growth +50%; Royal Blue Value +13%.

Jun 06 2019

Additional Factors

  • Jun 6, 2019

A heightening of the trade war coupled with a much more drastic inversion in the yield curve helped the S&P 500 slide lower in each of the four full weeks of May. The average return of the largest 25 firms in the index was buoyed by non-Tech firms for the first time in recent memory.

May 07 2019

Earnings Momentum

  • May 7, 2019

Our Up/Down Ratio reads 1.52. As expected, the impossibly-high earnings growth rates of 2018 have reached from the grave to pull 2019’s figures down. 

May 07 2019

Small Cap vs Mid Cap vs Large Cap

  • May 7, 2019

Our Ratio of Ratios has now spent six consecutive months in the Small Cap discount zone—matching the duration of the only other contemporary discount streak set back in 2016.

May 07 2019

Growth vs Value vs Cyclicals

  • May 7, 2019

What else is new, right? Growth has been a rocket ship to Value’s tricycle the past nine quarters. The valuation work has shown Growth stocks overvalued relative to Value for some time, but that doesn’t seem to be stopping the performance trend.

May 07 2019

Additional Factors

  • May 7, 2019

In the span of 146 trading days, the index experienced a -20% trapdoor followed by a +25% rocket ship—bringing us right back to where we started. Microsoft has become the second firm in the S&P 500 to reach the $1 trillion market cap threshold.

Apr 05 2019

Earnings Momentum

  • Apr 5, 2019

After four tremendous quarters of growth, Q4 2018’s final Up/Down Ratio reads 1.46—below our long- term average of 1.51. We expect even lower results in the quarters to come.

Apr 05 2019

Small Cap vs Mid Cap vs Large Cap

  • Apr 5, 2019

This is the largest relative Small Cap/Large Cap discount we’ve tracked since June of 2003. After racking up some very good earnings, the absolute trailing P/E ratios for both market cap segments have come down significantly.

Apr 05 2019

Growth vs Value vs Cyclicals

  • Apr 5, 2019

What else is new, right? Growth has been a rocket ship to Value’s tricycle the past nine quarters. The valuation work has shown Growth stocks overvalued relative to Value for some time, but that doesn’t seem to be stopping the performance trend.

Apr 05 2019

Additional Factors

  • Apr 5, 2019

A steep nosedive followed by a roaring recovery. The index shrugged off an inverted yield curve in Q1. For now, the market prefers the narrative of the remedial powers of lower interest rates over the possibility of a slowing economy. 

Mar 06 2019

Earnings Momentum

  • Mar 6, 2019

Q4’s second month of earnings reports produced an Up/Down Ratio of 1.71. This is the lowest “two-month” figure of the past five quarters and, gasp… dangerously close to our long-term average.

Mar 06 2019

Small Cap vs Mid Cap vs Large Cap

  • Mar 6, 2019

This is the fourth consecutive month that our Ratio of Ratios has resided in the Small Cap discount zone. Trailing P/E ratios have surged for Large Caps and Small Caps in the last two months.

Mar 06 2019

Growth vs Value vs Cyclicals

  • Mar 6, 2019

Growth stocks reclaimed their dominant position over Value and now lead in every market cap breakdown YTD. Growth also looks overvalued compared to its own history and compared to Value stocks.

Mar 06 2019

Additional Factors

  • Mar 6, 2019

The S&P 500 completed its best two month window of performance since the fall of 2010 and has leveled off at an interesting technical juncture—in line with the three false rallies of late 2018.

Feb 07 2019

Earnings Momentum

  • Feb 7, 2019

Our first Up/Down Ratio for Q4 stands at 2.87. During the 2018 earnings bonanza, we’ve had a very wide range of stratospheric “one-month” readings (2.74 to 3.67).

Feb 07 2019

Small Cap vs Mid Cap vs Large Cap

  • Feb 7, 2019

Our Ratio of Ratios normalized a bit in January. P/E expansion was a little more dramatic for Small Caps as the Russell 2000 posted its best monthly performance in eight years.

Feb 07 2019

Growth vs Value vs Cyclicals

  • Feb 7, 2019

Our Deep Cyclical group, fresh off a -19% retreat in 2018, posted its best month of performance (+11.1%) since 2011.

Feb 07 2019

Additional Factors

  • Feb 7, 2019

After narrowly avoiding the “official” bear market label in December, the S&P 500 turned in its best monthly return in more than four years. Those forgotten rank-and-file firms finally found their voices and produced the widest monthly performance gap between the Cap and Equal Weight measures in more than eight years.

Jan 08 2019

Growth vs Value vs Cyclicals

  • Jan 8, 2019

Our tech-heavy Royal Blue Growth segment faltered toward the end of the year but held up better than any other segment in a rough 2018.

Jan 08 2019

Small Cap vs Mid Cap vs Large Cap

  • Jan 8, 2019

This is the farthest our Ratio of Ratios has dipped into the Small Cap P/E discount zone since 2003.

Jan 08 2019

Earnings Momentum

  • Jan 8, 2019

With Q3 earnings season complete, our Up/Down Ratio stands at 1.85. We’re now left with one quarter of the sweet 2018 vintage to report—but take note of the tough YOY comparison on deck.

Jan 08 2019

Additional Factors

  • Jan 8, 2019

There was a lot less Christmas cheer with the market down 15% through Christmas Eve. The S&P 500 was propped up by a few big firms in 2018. Our 25-Largest firm average ended the year in positive territory and bested the Equal Weighted Average by almost 11%.

Dec 07 2018

Earnings Momentum

  • Dec 7, 2018

Our second Up/Down Ratio of Q3 stands at 1.88—this is the weakest “two-month” reading we’ve seen in the last four quarters. The energy selloff has us thinking about the up/down struggles of the 2014-15 Energy-sector earnings washout.

Dec 07 2018

Small Cap vs Mid Cap vs Large Cap

  • Dec 7, 2018

Small Caps are selling at a 2% valuation discount to Large Caps. Our Ratio of Ratios moved into the Small Cap P/E discount zone for the first time in 15 months.

Dec 07 2018

Growth vs Value vs Cyclicals

  • Dec 7, 2018

Our tech-heavy Royal Blue Growth segment underperformed for the second month in a row. Despite these rare missteps, the group still has a solid YTD return of +8.7%.

Dec 07 2018

Additional Factors

  • Dec 7, 2018

Since the latest trouble began on October 10th, the S&P 500 has experienced gains or losses in excess of 1% in 20 of the 39 trading days. Prior to October 10th, we saw only eight such days during the six month “melt up.” The Equal Weighted Average broke a four-month relative-performance losing streak to the Cap Weighted measure. Over the past 24 months: Cap Weighted +25.5%; Equal Weighted +18.4%.

Nov 07 2018

Earnings Momentum

  • Nov 7, 2018

Our first Up/Down Ratio of Q3 stands at 2.74—the third highest “one-month” figure of the past 34 years. However, it’s by far the lowest “one-month” figure of the past three quarters.

Nov 07 2018

Small Cap vs Mid Cap vs Large Cap

  • Nov 7, 2018

The recent plunge in our Ratio of Ratios is due to significant underperformance in Small Caps. Since the end of August: Russell 2000 -13%; S&P 500 -6%.

Nov 07 2018

Growth vs Value vs Cyclicals

  • Nov 7, 2018

Large Cap Value stocks were the best place to weather last month’s storm as Royal Blue Value lost “only” -6.1%. Small Cap Growth plunged 12.6%.

Nov 07 2018

Additional Factors

  • Nov 7, 2018

After pulling the load for so long, the much loved FAANG stocks proved to be a liability for the index. Coming into the month, the FAANGs accounted for 12.8% of S&P 500 market cap. When October was through, the five firms made up 20% of the losses, wiping out a collective $330 billion (one XOM) in market cap.

Oct 05 2018

Earnings Momentum

  • Oct 5, 2018

We’ve reached the halfway point of the 2018 corporate earnings bonanza! The final Up/Down Ratio for Q2 2018 stands at 2.06—the highest “three-month” figure we’ve seen since 1984.

Oct 05 2018

Small Cap vs Mid Cap vs Large Cap

  • Oct 5, 2018

The sharp divide in performance between Small Caps and Large Caps moved our Ratio of Ratios below the long-term median premium for the first time in seven months.

Oct 05 2018

Growth vs Value vs Cyclicals

  • Oct 5, 2018

Growth stretched its fantastic contemporary outperformance run to seven quarters, besting Value stocks once again. Since the end of 2016: Royal Blue Growth +53%; Royal Blue Value +21%.

Oct 05 2018

Additional Factors

  • Oct 5, 2018

The S&P 500 posted its best quarterly price gain (+7.2%) since the fourth quarter of 2013. However, 37% of the year-to-date returns have come from three stocks: Amazon, Apple, and Microsoft. Those three firms have added a combined $737 billion in market cap since the start of the year.