Latest Research

March’s huge Large-Cap outperformance sent our Ratio of Ratios tumbling to its lowest level since the start of the pandemic. Measured from the contemporary relative-strength peak of two years ago, the S&P 500 has a total return of +7% compared to -17% for the Russell 2000.

Our Up/Down ratio reads 1.19—Q4’s “three-month” result is somewhat higher than the range of the previous three quarters’ final numbers (1.02-1.07). Still, the current reading ranks in only the 22nd percentile of observations in our 39-year history.

A combination of strength from Information Technology with weakness from Energy resulted in the two swapping places in our sector ranks this month. 

Inflation concerns have been pushed aside by the upcoming curtailment of credit and lending. The possibility of a recession has no doubt increased, and risky assets are apt to face challenges.

We studied market behavior around yield curve re-steepening and identified six historical cases. Of those, three were successful and preceded major recessions. The other three instances failed and reversed to new lows. The gist of the study: We are at a critical crossroads.

The MOVE index, a volatility gauge for the bond market, has become a far better risk barometer—and it surged to a new cycle high in March.

Here we evaluate the returns of fixed-income ETFs since the Fed began its boosting campaign last March; for many mainstream offerings, the picture is not a pretty one. We recap the pain felt by investors in conventional fixed-rate bond funds.

The S&P 500 shrugged off a few bank failures and advanced 3.5% in March, ending the month above 4,100 for the first time since last July.

Read this week's Major Trend. 

Phil Segner digs into the earnings data on the latest Leuthold Podcast.

Yesterday the NASDAQ 100 closed up more than 20% from its late-December low, prompting the media to enthuse that it had entered a “new bull market!” Sadly, though, the “NDX” has no company among the broad indexes: During this NASDAQ move, gains in the S&P 500 and Russell 2000 have been just 6.5% and 2.9%, respectively, while the DJIA is down 0.5%. (So much for January’s “breadth thrust!”)

One of the most vivid memories of the Great Depression is the sight of nervous depositors lined up outside a bank hoping to withdraw their meager savings before the bank failed.  Like a rare tropical disease that was thought to be eradicated by modern medicine, the classic bank run reappeared this month in the form of Silicon Valley Bank.  At the beginning of March, the market had no particular concerns about the potential for systemic bank failures, but SVB’s sudden demise has cast a pall over the entire industry.

Read this week's MTI

Read this week's Major Trend. 

Style investors recently witnessed a rare event when, on February 13^th, the P/E ratio of the S&P 500 Growth Index fell below that of the S&P 500 Value Index. At first glance, it is tempting to attribute this valuation flip-flop to the 2022 bear market, which saw Value outperform Growth by a whopping 24.2%. However, the bear-induced collapse of Growth stock prices in 2022 only served to return the P/E spread to a level just below its historical median of 5.1, meaning that the final move toward parity was caused by a force outside the market itself. That “something else” was the S&P 500 style reconstitution that occurs annually on the third Friday of December.

Read this week's Major Trend.

Steve Leuthold, a nationally respected investment strategist known for his contrarian nature and unpretentious style, passed away peacefully at his home in Carlsbad, CA, on March 7, 2023, at the age of 85.

In mid-2020, we wrote that a new multi-year leadership cycle had probably begun. Technically, that belief hasn’t been disproven, but the extent of outperformance has been disappointing in the nearly three years since. 

The Major Trend Index current sits at Neutral, down one notch from its High Neutral reading entering February as the market pullback was enough to cause some deterioration in the Technical indicators. Equity exposure remains at 55% across tactical accounts.

Factor performance stabilized in February, recovering from a brutal start to the year. While those dynamics bled into the first two days of February, the trend quickly reversed as interest rates bounced off recent lows and stayed on an upward trajectory for the rest of the month.