Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
S&P 500: That Makes Seven In A Row
The S&P 500 hasn’t seen a down quarter since the summer of 2015. Since then, a series of seven gradual quarterly gains have produced a 26% gain. As Big Tech had a rare misstep in June, large banks carried the load for another small monthly gain in the index.
Earnings Momentum
The two-month Up/Down Ratio for Q1 results shows a reading of 1.48. Like the quarter before, an excellent “one-month” figure has been dragged down by a second month’s results.
Small Cap vs Mid Cap vs Large Cap
As the numerator of our numerator shrank, the Ratio of Ratios made its way into “Small Cap Discount” territory for the first time in seven months.
Growth vs Value vs Cyclicals
Value’s 2016 outperformance gap has been erased in the Large Cap space; Small Cap Value stocks slipped back into negative territory for YTD 2017.
Additional Factors
So much for that 2,400 resistance level. The S&P 500 plowed through its March 1st high as we closed out May and started June. Valuations, terrorist attacks, and a cloudier political climate are continually being shrugged off.
Earnings Momentum
We start 2017 with a robust reading of 1.91. With the painful memory of last quarter’s fast start and terrible finish still fresh in mind, we won’t be celebrating prematurely.
Small Cap vs Mid Cap vs Large Cap
We can say, with confidence, that although the relative P/E relationship sits at its long-term average (3% Small Cap premium), the absolute P/E ratios of both tiers are terribly high.
Growth vs Value vs Cyclicals
2017 is shaping up to be a Growth story. Our Royal Blue High P/E Tier is outperforming the Low Tier by a spread of 10% only four months into the year.
Additional Factors
Mr. Market bumped his head for the first time in quite awhile. After a streak of five consecutive months with new all-time closing highs, the S&P 500 failed to break through the March 1st highs during the month of April.
Earnings Momentum
The Up/Down Ratio sports a final “three-month” reading of 1.33 for Q4. The steady progress seen throughout 2016 came to a halt with the last two months of Q4 results—a disappointment, indeed.
Small Cap vs Mid Cap vs Large Cap
Our Ratio of Ratios has bounced between premium and discount for Small Cap stocks the last few months. Keep in mind that both the S&P 500 and the S&P 600 made new multi-year LTM P/E ratio highs in March.
Growth vs Value vs Cyclicals
Growth stocks, which took a relative pummeling in 2016, beat Value all three months of the first quarter. Small Cap Value stocks are the only segment still in negative territory YTD.
Additional Factors
Not a lot of month-over-month action for the S&P 500. But, on March 21st, the index finished down 1.24% putting an end to a run of 110 trading days without a decline greater than 1%—the longest such stretch in 22 years.
Up/Down Earnings: Ratio Sinks To Average
Looking back at January’s robust “one-month” figure (2.07), the current result is disappointing. It was towering 13% above the long-term “one-month” average in January and now sits looking up at the historical “two-month” mean.
Small Cap vs Mid Cap vs Large Cap
After a 2016 year-end spike, our Ratio of Ratios has settled down below its 3% long-term median premium. Large Caps have experienced additional numerator expansion in 2017, with the S&P 500 up 6% versus the Russell 2000 2.3% gain.
Growth vs Value vs Cyclicals
Large Cap Growth is now the best performing segment YTD. After a red-hot 2016, Small Cap Value has gone nowhere in 2017.
Additional Factors
The S&P 500 had a very relaxing and enjoyable February in the Keys. Aside from a regrettable lower-back tattoo, the index basked in a combination of easy gains, virtually no significant down days, and historically low volatility.
Up/Down Earnings: Ratio Springs Above Average
Building on the momentum of the past few quarters, our “one-month” Q4 ratio sits comfortably above its historical mean for the first time in seven quarters.
Small Cap vs Mid Cap vs Large Cap
After spiking higher in December, our Ratio of Ratios settled closer to its long-term average in January (thanks, in part, to relative underperformance in the Small Cap space).
Growth vs Value vs Cyclicals
Growth stocks scored a modest win over Value in January. This broke impressive streaks of Value domination—Growth’s last win in the Mid Cap space was last June.
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