Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
Additional Factors
Compared to the first three months of 2018, April turned out to be a bit of a snoozer for the S&P 500. One corner of the index did have a little excitement—Energy stocks. Yes, Energy stocks. The beaten- down, shriveled up sector had its best monthly performance in three years (+9.4%).
Earnings Momentum
Our Up/Down Ratio sports a towering reading of 1.79, which is the highest our “three-month” ratio has been since the exit of the Great Recession.
Small Cap vs Mid Cap vs Large Cap
Small Cap outperformance helped boost the Ratio of Ratios up from a 2% premium at the end of February. This is the first month our Large Cap P/E ratio has been below 20x since the end of April 2016.
Growth vs Value vs Cyclicals
Growth has outpaced Value in each market cap tier for five quarters in a row. Our Royal Blue High P/E Tier was the strongest performing segment of Q1 and outperformed the Low P/E Tier by a spread of 6.7%.
Additional Factors
The index had a quarterly loss for the first time since Q3 2015. Volatility—which had been pretty much non-existent for all of 2017—returned and even had the nerve to persist. With mega caps teetering in March, the Equal Weighted Average scored its fourth monthly win in the last year.
Earnings Momentum
Our Up/Down Ratio held on to its first month gains and now sports a “two-month” reading of 1.97. We’re experiencing a quantity of firms growing YOY EPS that is unmatched by recent history.
Small Cap vs Mid Cap vs Large Cap
Despite dramatic Large Cap outperformance over the last five quarters, our Ratio of Ratios hasn’t strayed more than 4% from its long-term median Small Cap premium of 3%.
Growth vs Value vs Cyclicals
Outperforming in up, and now, down months, Growth stocks seem to have the best of both worlds. After an ugly February, Small and Mid Cap Value stocks are now in negative territory YTD.
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.
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