Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
Additional Factors
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.
Additional Factors
The modest January air pocket went completely unnoticed by the index’s largest firms. Between the market peaks, Microsoft, Apple, and Amazon gained 15%, 26%, and 36%, respectively—adding a combined $495 billion to their market values.
Growth vs Value vs Cyclicals
After a brief surge in July, the seemingly-cursed Value stocks quickly resumed their roles as underperformers. Our Royal Blue stock lists (institutional favorites) continue to stretch their valuations higher.
Small Cap vs Mid Cap vs Large Cap
Since the end of February—the last month Small Caps were under the historical 3.5% valuation premium—the Russell 2000 has outperformed the S&P 500: +16% versus +8%, respectively.
Earnings Momentum
The second month of Q2 earnings gives us an Up/Down Ratio of 2.08. This is the highest “two-month” reading of the current tax-reform-juiced-earnings era but a bit of a disappointment given our “one-month” figure.
Earnings Momentum
As we digest the first round of Q2 earnings reports, our Up/Down Ratio sports another outrageous reading of 3.67. If you need a chart to make a case for peak earnings growth, here you go.
Small Cap vs Mid Cap vs Large Cap
The recent run up in Small Cap stocks, coupled with a less rosy (though still fantastic) trailing earnings profile, has given us the largest Small Cap premium we’ve seen in three years.
Growth vs Value vs Cyclicals
Our Royal Blue Low P/E Tier finally outperformed the High P/E Tier for the first time since November. YTD, Value stocks still lag Growth in all market cap tiers.
Additional Factors
The index, still a bit shy of its all-time closing high, did set a new total return high on July 25th—six months after the trouble began in January. The FAANG stocks had some divergent components in July but still provided a big boost for the S&P 500.
Earnings Momentum
Wrapping up Q1 reporting, our Up/Down Ratio is flying high at 2.00. This is the highest “three-month” figure since 1996, even besting those readings immediately following the Great Recession.
Small Cap vs Mid Cap vs Large Cap
Our Ratio of Ratios has been stuck in the Small Cap premium range of 2% to 7% for the last ten months—limiting the ability to make a call on market cap preference with this vignette.
Growth vs Value vs Cyclicals
Growth stocks maintained their dominance over Value in Q2. This outperformance has finally leveled relative historical valuations between Value and Growth.
Additional Factors
Small Caps zoomed ahead of Large Caps the last four months. Couple this with the top-25 largest S&P 500 firms still charging higher and we have a very interesting “barbelled” performance profile.
Earnings Momentum
After Q1’s record breaking “one-month” figure, our “two-month” reading could only disappoint. Still, May’s Up/Down Ratio of 2.01 is one of the highest “two-month” figures in 35 years of observations.
Up/Down Earnings: A Little Shrinkage
Small Cap vs Mid Cap vs Large Cap
Other than an initial bump in the Small Cap premium in March, Small Caps’ last three months’ outperformance hasn’t manifested itself in this vignette.
Growth vs Value vs Cyclicals
Growth’s year-and-a-half dominance over Value continues to roll on. Growth’s substantial gains have almost erased Value’s long-standing relative valuation premium.
Additional Factors
Like a thirty-year-old still living with his parents, the market doesn’t seem to have much direction. Since 1950, the median recovery time (if the market does indeed recover) from an intermediate correction is just 33 trading days. We’re now going on 80 trading days since the low set on February 8th… tick tock.
Earnings Momentum
Our first Up/Down Ratio based on 2018 earnings sports a mind-blowing reading of 3.22—the highest “one-month” figure in 35 years of data.
Small Cap vs Mid Cap vs Large Cap
This observation falls neatly in the middle of our 2% to 7% Small Cap premium range we’ve observed over the last eight months—providing no real “call” for this vignette.
Growth vs Value vs Cyclicals
Beaten-up Small and Mid Cap Value stocks performed the best during April. In the Mega Cap space, however, Growth continued to outperform.
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March 2026 Issue
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March 2026 Issue
