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Market Cap Performance Shifts

Published 11/20/2017, 10:07 AM
Updated 07/09/2023, 06:31 AM

Opinion

The indexes closed mixed Friday with positive internals on the NYSE and NASDAQ as volumes rose from the prior session. There was an interesting shift in terms of the performance when viewed from a market cap perspective with a slight improvement in one of the charts. The data is unavailable this morning so we will focus on the charts. In our opinion, the recent lift in forward 12 month earnings estimates for the SPX based on Bloomberg consensus does take some pressure off of our valuation concerns. As such, while we believe the market remains selective regarding individual name participation, the current varying trends discussed below for the indexes should be respected until proven otherwise.

On the charts, the indexes closed mixed on Friday with positive internals and respectable volume. The MID (page 4), RTY (page 5) and VALUA (page 5) closed higher on the day as the rest posted losses. The MID and RTY tested resistance but the VLAUA actually closed above resistance adjusted below. What we find interesting is the shift in performance Friday when viewed from a market cap perspective. Over the past several weeks, the large cap indexes have led charge, leaving the small and mid-caps lagging. Friday saw the opposite. Even with positive market internals, the large caps posted losses with the mid and small caps benefitting. We would not project at this stage that a major shift is at hand. However, it may be something to watch more closely. So the current near term trends for the indexes are as follows: Positive: COMPQX (page 3), NDX (page 3). Neutral: SPX (page 2), DJI (page 2), MID, RTY, VALUA. Negative: DJT (page 4).

The data is unavailable this morning.

In conclusion, we remain of the opinion that the market remains selective in terms of individual names participating in rallies while Friday’s market cap performance may be something to monitor regarding a participation shift. The near term trends listed above should be respected until proven otherwise.

Forward 12-month earnings estimates for the SPX from Bloomberg of $110.60 leave a 5.46 forward earnings yield on a 18.4 forward multiple.

  • SPX: 2,547/2,594
  • DJI: 23,266/23,567
  • NASDAQ: 6,557/6,753
  • NDX: 5,994/NA
  • DJT: 9,380/9,750
  • MID: 1,810/1,843
  • Russell: 1,450/1,492
  • VALUA: 5,761/5,864

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