Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
Additional Factors
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.
Earnings Momentum
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.
Small Cap vs Mid Cap vs Large Cap
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.
Growth vs Value vs Cyclicals
And the nine previous quarters! In an amazing run, our Royal Blue Growth has now outperformed Royal Blue Value for ten consecutive quarters.
Additional Factors
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.
Earnings Momentum
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.
Small Cap vs Mid Cap vs Large Cap
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.
Growth vs Value vs Cyclicals
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%.
Additional Factors
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.
Earnings Momentum
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.
Small Cap vs Mid Cap vs Large Cap
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.
Growth vs Value vs Cyclicals
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.
Additional Factors
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.
Earnings Momentum
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.
Small Cap vs Mid Cap vs Large Cap
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.
Growth vs Value vs Cyclicals
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.
Additional Factors
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.
Earnings Momentum
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.
Small Cap vs Mid Cap vs Large Cap
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.
Growth vs Value vs Cyclicals
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.
Perception for the Professional
March 2026 Issue
Featured Articles
Sector Navigator
March 2026 Issue
