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We’ve discussed market analogies with the year 1999 at length, and will give it a rest for awhile—in part because parallels to the year 2000 have cropped up! In the first five weeks of 2020, the NASDAQ 100 has already outperformed the NYSE Composite by about 7%, while in the first five weeks of 2000 the spread was 8%.

Market bulls rightly note that in the late 1990s, dozens of stocks exhibited Tesla-like action before the fun eventually came to an end. But we’d remind investors that the last few years have featured other “busted parabolics,” and all of them were followed in short order by broader market troubles.

Based largely on the bearish trends in our monetary and liquidity measures, we were correctly negative on stocks throughout most of 2018. It’s therefore especially painful for us that 2019’s market rebound has been credited almost entirely to the “pivot” in most of those measures.

The simultaneous “New Era” ascension in margins and P/E ratios hasn’t generated anything exceptional from a return perspective. To the contrary, annualized S&P 500 total returns over this 25-year period of margin magic and (mostly) escalating P/E ratios merely match “Old Era” returns.

After last year’s spectacularly successful pivot following the December 2018 plunge, the thinking is that future rate hikes are the bull market’s only threat. Perhaps that will be the case; the belief is certainly well-supported by postwar U.S. economic history, but it also reveals a shocking lapse in short-term memory.

Read this week's Major Trend.

The common, and easy reason given for the recent Tesla move is a short squeeze. We don’t deny that existing shorts are getting “squeezed,” but that’s a result, not a cause, of the recent move. The more likely instigator is speculator FOMO (Fear Of Missing Out).

We are turning more cautious toward lower-grade credit and will likely remain so until we see the peak in new coronavirus cases.

Chinese and Hong Kong markets are currently following the same script as seen during the SARS outbreak, but we caution against using S&P 500 performance as a guide for what is likely to happen this time around.

In the past we’ve made the observation that adding/deleting stocks to/from a popular index can have a profound impact on the target stocks’ short-term trading volume and performance.

The decade of the teens has given way to the decade of the twenties and “year in review” retrospectives are in the books, but as the calendar’s last digit rolls from 9 to 0 we consider one more anniversary worth remembering.

Leuthold Core and Leuthold Global were both down slightly during January, as negative long-equity performance overshadowed positive results from fixed income and gold.

A late-January swoon resulted in the first monthly loss for the S&P 500 since August.

January’s minuscule loss could have been worse if GAMA (Google/Amazon/Microsoft/Apple) hadn’t continued its incredible run. The single-digit gains from those four names, now 16% of the S&P 500 market cap, buoyed the index by a little over 1%.

January’s outperformance gap (6%) between Royal Blue Growth versus Royal Blue Value was the largest in four years. After showing signs of life in late 2019, the Value-comeback story seems all but dead.

Another month of Large Cap outperformance helped push our Ratio of Ratios back down to a level we haven’t seen since last summer. Since going decidedly into the Small Cap discount zone at the end of last March, the S&P 500 has outperformed the Russell 2000 by 10%.

Our Up/Down Ratio reads 1.52. This figure is inline with the first three “one-month” readings of 2019, but remains well below the historical average. We’re still two months away from escaping the long shadow of the 2018 earnings bonanza.

The top-three rated sectors are Financials, Health Care, and Information Technology, the same as last month. Real Estate moved out of the bottom three rankings after a one-month stay and Materials edged back in following its one-month respite. Utilities and Energy round out the bottom, which have placed among the lowest rated now for eleven consecutive months.

Our equity research typically focuses at the sector and industry group levels, thus, in this analysis, we drill down and explore the presidential effect on a more granular level to see what interesting equity trends may have transpired in the past cycles.

Extraordinarily low bond yields—often negative bond yields outside the U.S.—have significantly elevated investor anxieties, leaving the impression of facing a high-risk, low-return world. Consequently, during much of the contemporary expansion, the existence of very low yields has pushed several investors toward a more conservative portfolio allocation.