Latest Research

Depending on how you measure it, with a few days to go, it’s either been a superbly profitable 2023 or a year that barely crept above the 30-year average.

Read the latest MTI commentary

Join us for a Zoom Call with Chief Investment Officer, Doug Ramsey where he will share his thoughts and observations on today's market and what he sees looking ahead.

Read this week's Major Trend.

The equity rally during November was strong enough to push the Major Trend Index back into Neutral territory, as the increasingly positive Technical components serve to offset bearish Valuation and Cyclical category readings. 

The recent rebound in Small Caps still leaves their entire gain off the lows at a fraction of what a typical bull would have delivered. In the long term, that’s an opportunity; in the short term, it’s a warning.

In 2023, the U.S. economy has continued to grow despite recessionary warning flags, while stocks have shrugged off the most aggressive monetary tightening since Paul Volcker’s reign. Impressive.

The S&P 500’s 8.9% November gain ranks as the 18th largest over the 800 months since the index’s inception in March 1957. Are such short-term market spikes typically followed by additional upside? The evidence is not quite as compelling as the data-mined analysis we found on X (formerly Twitter) initially had us believing. 

It would take a solid December gain of about 5% to bring the S&P 500 back to its all-time high of 4,796.56—printed on January 3, 2022. Well then, what’s been accomplished in the nearly two-year trip to nowhere? For one, valuations for the cap-weighted S&P 500 have receded from truly bubbly readings to levels we’d merely consider “pretty damn high.” 

Some well-known asset allocators see tremendous value in EM equities. Yes, their P/E ratios are low. However, their “PEG” ratios (P/E-to-growth) are not, if the post-GFC period provides an accurate snapshot of sustainable growth.

We don’t dismiss the widespread belief that the Federal Reserve has lifted asset prices as well as wealth inequality over the last dozen or so years. Keep in mind, though, the Fed was far from the only central bank to greatly expand its bond purchases in this era.

The retail investor is warming up to the stock market. We also see the “smart money” is also taking a shine to stocks. It’s rare to see these two classes in agreement. Usually when the retail public becomes euphoric, insiders become fearful.

It’s no surprise that investors have become giddy after the November upside explosion brought the year’s S&P 500 gain to near 20%. The question is whether the giddiness is excessive in light of the price action. The answer is that it is extremely close.

Lately a few readers have asked how or when we will know that the still-negative leading economic indicators have failed. We don’t have a good answer, other than to observe market-based economic measures for sharp recoveries, like cyclical stocks, corporate credit spreads, and industrial commodity prices.

Our Major Trend Index is not an economic forecasting tool. Still, we thought a U.S. recession might be imminent when the MTI dropped into bear territory on October 6th.

Equities have dodged the impact of this year’s monetary tightening, and Large Cap Growth stocks have once again proved to be the most artful dodgers.

There’s an old stock market adage that says if the bulls come for Thanksgiving, then the bears will have Christmas. Last month though, Thanksgiving was one of the few days stocks didn’t go up (… but only because the NYSE was closed). No problem. The market found plenty of other November excuses to rally.

This month’s Refresh continues our practice of summarizing the latest earnings season by evaluating the composite results of the S&P 500 member companies.

Will 2023 be remembered as a delightful year with +20% returns, or might it go down as a time when stocks lagged even a risk-free money market fund? We introduce this month’s research topic: The huge return disparity between the capitalization weighted S&P 500 and the equal weighted version.

Read this week 's Major Trend.