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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.

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.

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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.

Cumulatively, mutual funds (MFs) and ETFs (ex-money market funds) captured more money in 2017 YTD than any other year over the same period (data through November).

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.

2017 was a great year for factor performance. We track seven factor categories and Value was the only one to produce a negative return spread.

The new tax bill will be another tailwind for these bonds as Corporate bond issuance is likely to be reduced going forward.

Our Risk Aversion Index turned lower in December and reached an all-time low. We remain favorable toward higher quality credit within fixed income.

The most common 2018 time-cycle pattern among major markets is a fall correction, with the U.S. and Japan faring better than their European counterparts.

While we still believe flattening is the more likely scenario over the medium term, we do feel the recent flattening move is a bit overdone and there are several divergences that suggest a short-term steepening correction is in store.

This multi-factor estimate of stock market risk is based on a regression to median stock market levels.

Tax cuts, a strong economy, and daily stock market records have lifted measures of investor sentiment to levels not seen in two decades. But sentiment is only a slightly better timing tool than valuations (which is not saying much), and there’s plenty of room for excitement to build before a final top is at hand.

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With the northern U.S. stuck in a deep-freeze, there could hardly be a worse time for the nation’s utilities to fail. But conventional chart work suggests that is exactly what’s happened. The Dow Jones Utility Average fell below its 40-week moving average last Friday, dropping the simple four-indicator model, shown in the chart, into third gear after it had spent most of the year with “four on the floor.”

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While investors look high and low for signs of excess that might portend the next bear market, they should pause and consider the excesses that have recently gone away.

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We observed in July that at an age when most bull markets are prepared to see the mortician, this one still seems to need a pediatrician. And five months later, the bull is acting as immature as ever!

See this week's Major Trend Index.