Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
Additional Factors
Before rallying back to a more modest loss, the index was down 11.8% from its all-time high on January 26th. Also of note was the volatility—the index moved at least 1% in 12 of the 19 trading days. The S&P 500 had only experienced three 1% daily moves in the five months prior to February.
Earnings Momentum
Our Up/Down Ratio soared to an impressive reading of 2.65—nine years into the current recovery. This is the highest “one-month” reading we’ve seen since 1993.
Small Cap vs Mid Cap vs Large Cap
Thanks to some outsized outperformance in January, the median trailing P/E for our Large Cap decile rose from 21.5x to 22.5x while the measure for Small Caps remained virtually unchanged.
Growth vs Value vs Cyclicals
Our Royal Blue Large Cap Growth names logged a decent “yearly” return in just one month (+9.4% in January). Value continued to lag across all market cap tiers.
Additional Factors
January 2018 lived up to the hype in a big way as the S&P 500 turned in its best January performance since 1997.
Earnings Momentum
Our Up/Down Ratio sports a “three-month” reading of 1.43—the worst full quarter figure of 2017. Above-trend earnings growth has not translated into above long-term average readings in our ratio.
Small Cap vs Mid Cap vs Large Cap
After spending most of the year below our median long-term premium of 3%, our Ratio of Ratios has sprung back to where it started twelve months ago.
Growth vs Value vs Cyclicals
The pendulum swung Growth’s direction in 2017, erasing Value’s 2016 relative gains in the Large and Mid Cap tiers. Cyclical stocks also performed very well.
S&P 500: Can You Hear The Steel Drums?
No volatility and only one (barely) down month—it was easy living for the S&P 500 in 2017. It was also a top-heavy year for the index. The largest five firms: AAPL, MSFT, AMZN, FB, and GOOG accounted for nearly a quarter of the index’s gain.
Earnings Momentum
Our Up/Down Ratio sports a “two-month” reading of 1.43—the lowest level of 2017. All is not lost—we’ve seen decent aggregate earnings growth in 2017 despite below average Up/Down figures.
Small Cap vs Mid Cap vs Large Cap
After some turbulence early this year, our Ratio of Ratios seems to have found a comfortable spot. This is the third consecutive month with a 4% premium for Small Caps.
Growth vs Value vs Cyclicals
With a late-month surge in Financials and slump in Tech, our Royal Blue Low P/E Tier turned in its best monthly performance of 2017, and beat the High P/E Tier for only the third time this year.
Additional Factors
The eighth consecutive month of gains for the S&P 500 was made possible by some unlikely heroes.
Earnings Momentum
The Up/Down Ratio sports a lofty reading of 2.08—the best “one-month” measurement since January of 2015. We’ve seen this movie before—strong initial readings have fallen apart in each of the last four quarters.
Small Cap vs Mid Cap vs Large Cap
This is the first time this year we’ve spent two consecutive months above the long-term median Small Cap premium of 3%.
Growth vs Value vs Cyclicals
Growth stocks more than made up ground lost to Value in September. Dividing stocks by market cap, Growth segments are leading Value by spreads of 10-15% YTD.
Additional Factors
The S&P 500, showing little concern for valuations or the political climate, had its best month of performance since February.
Earnings Momentum
The Up/Down Ratio sports a final reading of 1.44. The soft earnings comparison window, running from Q1 2015 to Q2 2016, is no more.
Small Cap vs Mid Cap vs Large Cap
On the back of robust Small Cap performance, our Ratio of Ratios spiked through both the Small Cap discount zone and the long-term median premium.
Growth vs Value vs Cyclicals
Outperformance in Financial and Energy stocks helped Value find its legs in September. For Q3, however, Growth still beat Value in all three segments.
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