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As the S&P 500 rallied 4.5% over the course of May, forward earnings estimates continued to crumble.

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The current rally is either the first upleg of a new bull market, or the second-largest bear market rally in the last 125 years. The lone development that can settle the issue is for the S&P 500 to move above its February 19th closing high of 3,386.15.

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Raise your hand if you’ve heard this one before:

        (A)  80% of active funds underperformed their index over the past 10 years.

Now, keep your hand up if you have also heard this:

        (C)  Therefore, investors should buy passive index funds.

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When we first met Steve Leuthold in the old company office in a renovated warehouse, he was updating a several-foot-long chart of either the DJIA or S&P 500, by hand, and we got a brief lecture on the importance of using logarithmic scale on price charts.

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We review the somewhat out-of-character performance of the Utilities sector to try to pinpoint what is influencing results. This article touches on several potential drivers for the sector’s relative strength.

The most valuable gauge we construct from the ISM Manufacturing and ISM Non-Manufacturing reports sunk into bear territory with the April update, signifying a serious margin squeeze has hit the service sector.

Even casual market observers have begun to marvel at the NASDAQ’s ability to defy the rest of the stock market, and the “U.S. Exceptionalism Index” continues to go parabolic.

Valuations aside, the absence of any sustained market pain over the last ten years argues for challenging times for stocks in the new decade.

If we assume that valuations will “bottom” at the “richest” levels ever seen at a bear market low, there’s still 32% downside remaining in the median S&P 500 stock.

How does one value a stock market in which 12-month forward EPS estimates show their widest dispersion in history? A good start might be with methods we use when forward estimates show practically no dispersion (like three months ago). In either case, we place little weight on such estimates; each revision usually has only marginal impact on our 5-Year Normalized EPS.

One would think that one of the most explosive market rallies of all time would trip-off all the traditional “breadth thrust” signals, or maybe even invent a few of its own. Sorry, no luck.

If many of the typical leaders of a new bull market aren’t leading, what is? Technology, obviously—and the bigger, the better.

Small Caps lagged during the bounce off the March lows before a late-April spurt briefly pulled them ahead of the S&P 500. Still, considering that Russell 2000 losses were so much steeper than the S&P 500’s (-43% versus -33%), we would have expected something better.

The optimists are betting that the longest bull market in history—one that carried valuations above levels seen at all but one of preceding cyclical peaks—has been followed by the shortest bear in history, at 27 days.

It’s a down year for stocks, yet John Bogle must still be chuckling. A full-employment economy that had propped up one of the two most overvalued stock markets in U.S. history just suffered a cataclysmic “sudden stop.” Yet Bogle’s buy-and-hold disciplines have so far dodged the bear.

This study examines the traditional protocol for bear markets to find which tactics worked as expected and which were caught misbehaving. Overall, we conclude that investors were not ready to commit to a full leadership rotation.