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

Sep 06 2019

Earnings Momentum

  • Sep 6, 2019

Depending on one’s preferred earnings measurement (operational, reported, GAAP, non-GAAP), YOY earnings growth for Q2 will be zero or, at best, the very low single-digits.

Sep 06 2019

Small Cap vs Mid Cap vs Large Cap

  • Sep 6, 2019

Another month of Small Cap underperformance has sent our Ratio of Ratios to a new contemporary low. Looking back to the late 1990s as a guide, a divergence in valuations can persist for several years. 

Sep 06 2019

Growth vs Value vs Cyclicals

  • Sep 6, 2019

Our Royal Blue Growth stocks shined with a 2.2% August gain as the rest of the segments faltered. Since the start of 2017: Royal Blue Growth +67.6%; Small Cap Value +0.75%.

Sep 06 2019

Additional Factors

  • Sep 6, 2019

Yields crashed, gold surged, and investors fawned over low-volatility dividend-paying stocks. The giant, deflation-breathing lizard that has plagued our friends in the Far East for the past three decades seemed like it was lurking just off our shores.

Aug 06 2019

Earnings Momentum

  • Aug 6, 2019

For the first month of Q2 2019 earnings, our Up/Down Ratio reads 1.50. This below-average figure was expected as we continue to work through the rough comparisons from 2018.

Aug 06 2019

Small Cap vs Mid Cap vs Large Cap

  • Aug 6, 2019

Just one year ago, this relationship registered a Large Cap premium of 12%. During the last twelve months, the S&P 500 gained 6% compared to a 6% loss in the Russell 2000 (price return only).

Aug 06 2019

Growth vs Value vs Cyclicals

  • Aug 6, 2019

Mid Cap Growth Can’t Be Stopped

Aug 06 2019

Additional Factors

  • Aug 6, 2019

Another record for the S&P 500! Stocks are doing great! Well... not so fast. We closed July with the S&P 500 +1.7% above its high set in the summer of 2018. Contrast that to the S&P 400 and Russell 2000 ending the month still -3.8% and -9.5%, respectively, below last year’s price highs.

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%.