Latest Research

If the full extent of the market decline, which began in March, bottomed on April 8th, it will stand as the deepest loss in our register of severe corrections (-12% to -19%) dating back to 1959. It is notable that, other than 1999, in all prior cases the SPX bottomed with a Normalized P/E ratio below its median of 19.4x; on April 8th, that figure (25.4x) still ranked in bubble territory.

Out of necessity, bear market rallies and the first leg of a new advance look nearly identical; if they didn’t, the game would be too easy. However, the action (or lack of it) within the most economically sensitive groups would seem to support our bearish take. 

Markets are no longer hanging on every Fed whisper — fiscal policy has muscled into the spotlight. As investors navigate this new landscape, the old game of decoding central bank signals is giving way to something much clearer

Our research shows that weaker equity markets are favorable for active managers, and this quarter’s overall success rate of 57% is consistent with that expectation. Active managers outperformed in six of nine style boxes, led by an excellent 82% win rate for small-blend managers and a 74% success rate in large value.

Today’s disproportionate outflow from gold miners even as physical gold continues to attract new money, is the proverbial “canary in the mine” that serves as a warning of looming trouble. When the miners are bleeding assets, investors may wish to take precautions against the impending risk of lower gold prices.

Read this week's Major Trend.

A wild April ended almost exactly where it started for the S&P 500, leaving our downside estimates pretty much unchanged. A decline to median levels (1957-date) would put the S&P 500 at 3,487 (a 37% loss).

The Select Industries portfolio is shifting defensively in response to evolving Group Selection Scores, exiting Homebuilding and Interactive Media while adding to more stable industries like Data Processing, Education Services, and Gas Utilities. April’s volatility also drove a broader rotation across the GS framework, with cyclicals like Airlines and Internet Services making way for more resilient Health Care and Reinsurance names. While Financials still offer upside if uncertainty fades, rising tariff risks have pushed several Consumer and Tech groups into the Unattractive category.

In early April, the popularity search for “NYSE circuit-breaker levels” spiked. The S&P 500 came within a whisker of an official bear market. Then, following a Presidential tweet to buy, the largest daily gain since October 2008 came along. By the end of the month, the index was riding its longest daily winning streak since November 2004. All of that turmoil and heartburn led to a -0.7% month-over-month change for the S&P 500.

After Royal Blue Value’s huge relative win in March (+7%), Royal Blue Growth posted its best relative performance month since 2001, with a 10% advantage over Value.

Our Ratio of Ratios sits right on top of its one-, two-, and three-year moving averages. The Small Cap discount has been greater than 20% for all three of those periods. For years, we’ve said that a recession was probably needed to change this valuation dynamic. So far, the mounting prospect of a recession has only exacerbated Small Caps’ plight.

The Up/Down ratio reads 1.53, which is below average. This “one-month” print breaks a streak of four successively higher readings. For the last twenty years or so, our Up/Down ratio has been pretty consistent about either being in an improving cycle or a deteriorating cycle. Is the mini upswing over?

Read this week's Major Trend. 

The S&P 500’s estimated bottom-up operating EPS nosed slightly higher during the first month of Q1 reporting. This is a welcome development following the steeper-than-usual decline over the past six months. Projections for the next three quarters of 2025 weren't as fortunate in April, as they all experienced a noticeably steep leg down of around 3%. The full-year 2025 operating EPS estimate for the index now sits at $260.72, down a conspicuous 4% since the beginning of the year.

Read this week's Major Trend.

Read this week's Major Trend.

Markets remained volatile in March, with growth stocks facing significant losses, particularly within large-cap sectors. The Core strategy, down just 2.2%, continued to outperform relative to traditional equity options thanks to its defensive positioning. Meanwhile, the Select Industries strategy benefitted from safe-haven sectors like healthcare and precious metals, while AdvantHedge saw a solid 5.9% gain, driven by profitable short positions in overvalued consumer and tech stocks.

Read this week's Major Trend. 

Read this week's MTI update

This cycle’s earnings performance has been exceptional. If EPS were to top out today, the peak-to-peak annualized performance from the last cycle high will have been the strongest among six cycles since the early 1970s. Nonetheless, nominal growth in EPS has been boosted by elevated inflation, which has supplied almost one-half of the last five years’ growth rate.