Research.LeutholdGroup

The Up/Down ratio reads 1.41. This final figure for 2024 marks four consecutive quarters of improvement. Will the broadening earnings-growth story continue in 2025? Soft look-backs and momentum will have to overcome the renewed possibility of an economic recession.

• Read more

Up markets or down markets, Small Caps have chronically underperformed Large Caps over the past three years. Why hasn’t the Ratio of Ratios continued to move farther south instead of sideways? Despite the relative weakness in the “P” for Small Caps, the shrinking “E” means the P/E ratio stays elevated.

• Read more

Royal Blue Value, our mega-cap value proxy, was the only style box in positive territory for Q1, turning in an impressive 7% gain. Relative to RB Growth (-5%), RB Value had its best quarter since Q1-22.

• Read more

The Magnificent Malignant Seven posted an average return of -16% in Q1, with META (-2%) being the only firm not down double digits to start 2025. These plow horses of the past two years contributed all of the Q1 loss (and then some) for the Cap Weighted S&P 500 (-4.3%). Outside of the $2.8 trillion market-cap damage from those firms, the Equal Weighted S&P 500 was just about flat for Q1.

• Read more

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.

• Read more

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.

• Read more

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%.

• Read more

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.

• Read more

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.

• Read more

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%).

• Read more

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.

• Read more

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.

• Read more

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.

• Read more

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.

• Read more

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.

• Read more

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%).

• Read more

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. 

• Read more

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.

• Read more

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.

• Read more

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.

• Read more