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

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%.

Oct 05 2024

Earnings Momentum - Positive Direction

  • Oct 5, 2024

The Up/Down ratio reads 1.32—the best quarter-end figure since Q4-21. More firms outside of the mega-cap space seem to be participating in the EPS-growth story for the first time in two-and-a-half years.

Oct 05 2024

Large Cap vs Mid Cap vs Small Cap

  • Oct 5, 2024

Our Ratio of Ratios now sits at the widest Small Cap discount of the last 18 months. The Small Cap advantage generated in July was gradually undone in August and September, with the S&P 400 and Equal Weighted S&P 500 (the best proxies for this study) both ending Q3 with 9% gains.

Oct 05 2024

Leadership Dynamics: Growth/Value/Cyclical

  • Oct 5, 2024

Both Mid- and Small-Cap Value advanced 10% in Q3, easily outpacing all the other style boxes. Yet, since these two segments have been such laggards in this cycle, they’re still the only pockets in our universe with median P/E multiples below their 1982-to-present average.

Oct 05 2024

Other Market Undercurrents

  • Oct 5, 2024

The index ended September with its fifth-consecutive monthly gain and fourth-consecutive quarterly advance. Ten of the last eleven months have been positive, resulting in a 37.4% price gain. A window like this doesn’t come around very often—since the Y2K bubble, the only two runs that can top today’s are the eleven-month periods ending January 2010 (+46%) and February 2021 (+48%).

Sep 09 2024

Earnings Momentum - Surprise Bump

  • Sep 9, 2024

The Up/Down ratio reads 1.32—this is the highest “two-month” figure we’ve seen over the last two-and-a-half miserable years. The 3,600 firms reporting in August had a standalone ratio of 1.40—which is, historically, a decent level of higher YOY EPS.

Sep 09 2024

Small Cap vs Mid Cap vs Large Cap

  • Sep 9, 2024

The Small Cap discount widened once again, as the long-running theme of Large Cap leadership over Small Caps resumed in August. The S&P 600 SmallCap index lost 2%, while the Equal Weighted S&P 500 gained 2%.

Sep 09 2024

Growth vs Value vs Cyclicals

  • Sep 9, 2024

Royal Blue Growth (+4%) was our best performing style box in August. That gain has pushed this large-growth proxy’s median P/E ratio to 42.8x—the most extreme observation since the contemporary peak of 45.0x set in December 2021.

Sep 09 2024

Other Market Undercurrents

  • Sep 9, 2024

Seven of eleven underlying sectors outperformed the overall index in August (+4.5% versus +2.3%, respectively). However, those seven subsets make up just 48% of the S&P 500. The +1% returns contributed by Info Tech and Communication Services (which comprise 39% of the S&P 500) highlight just how much the index depends on those two tranches of firms.