The Leuthold Group
@LeutholdGroup
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Institutional Research & Investment Management Disclosure: https://t.co/jZZZtQNGaY Distributor: Quasar Distributors, LLC
Minneapolis, MN
Joined June 2009
We have been active asset allocators for about four decades. Our outlook is long term, yet we continually evaluate the market's underlying health and make changes as needed. $LCR Leuthold Core ETF.$LST Select Industries ETF.$LCORX Leuthold Core Fund.
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Since 1947, the standard of living in the U.S. has consistently improved, boosting workers' buying power. However, sky-high valuations have sharply reduced stock market purchasing power. It now takes over 218 work hours to afford one $SPX unit. #StockValuations #WorkerWages
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In June, S&P 1500's normalized P/E ratio fell below its median, implying potential returns for the average stock near the +10% LT norm. The relative Price/CF sank to the lowest decile, usually a trigger for a rebound in the avg stock vs $SPX. #StockMarket #Investing
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We're choosing to wait a bit before deeming the straggling bellwethers as yellow flags.
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Just 3 out of 8 leading indicators have confirmed the new $SPX bull market peak. Uneven recoveries are not unusual, though, considering the ~19% drop earlier this year. $RUT #Stocks #Investing
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In July, both the S&P 500 and the $NYSE Daily Advance/Decline Line reached their highest levels in a year. Historically, that suggests a promising outlook for stock-market upside through year-end. #StockMarket #Investment $SPX
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June’s action again provided the Cap-Weighted S&P 500 a decent YTD lead over Equal-Weighted $SPX, but not quite to the extent of 2023 & 2024 (thus far). Equal-Wgt vs Cap-Wgt relative strength also hit a fresh 22-year low. #investing #Mag7
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Pre-2020, when @ConferenceBoard Index of #LEI was in recession mode, $SPX posted -0.3% TR annlzd; the rest of the time, SPX was up 11.6%. Post-2020, LEI has become a contrary signal: Since 2020 when LEI has been in recession mode (45% of time) SPX gained 18% annlzd. #Economy
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May was $SPX’s best mo. since Nov-23. Mag 7 drove the gain from the April low (+19%)—only $AAPL lagged. But recall that #Mag7 led SPX’s deep downswing this year, and the Equ.Wtd. Mag 7 is still -5% YTD (thru May). For better or worse, the fate of SPX is tied to these 7 firms.
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Bull or Bear? Here’s How the Outlook for Stocks Stacks Up. Leuthold's CIO Ramsey says, "Investors shouldn’t discount the power of positive momentum," per @MorningstarInc sr. reporter Sarah Hansen
morningstar.com
Headwinds and tailwinds are roughly in balance, but the outlook could tilt either way.
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Pre-Y2K, NYSE A/D understated internal strength of $SPX and technicians prematurely cried “wolf.” Today, A/D is exaggerating the market’s underlying health (note EW lagging perf.); those relying on this gauge fail to see that a terminal distribution phase has likely been underway.
That's NOT❌a BUBBLE. While there are similarities between 2022 bear to bull market when compared to Dotcom era, there's a massive difference between the 2 periods when reviewing NYSE A/D Line performance!. From 1997 until peak, NYSE never made a new high, NOT❌the case today.
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Dip-buyers can be handsomely rewarded. Buying $SPX each time its loss topped 12% yielded a 1-yr avg gain of 12% (3-5% more than a random entry point). BUT in 50% of cases, the 12%+ loss evolved into a bear market with nasty declines of -22% to -52% before bottoming. #investing
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With 2 mos. of reports in, the Q1 Up/Down Earnings Ratio tumbled, ending a multi-quarter trend of higher results. With the ugly look-back numbers (Q1-24), earnings growth should be well above the LT avg. The past 12-mos.’ modest EPS upswing sputtered in the wake of the trade war.
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The April 24th, Zweig Breadth Thrust (NYSE A/D data) has weakened the bears’ case. The last time ZBT sparked during a bear market was 1949. Since 1950, 6-mo and 12-mo returns after a ZBT are nothing but green. The current gain is the 2nd best in this data.
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Except for 1999, past severe losses ended w/ the SPX norm-P/E below its 19.4x median. Following 2025’s Feb-Apr, 18.9% loss, the P/E ratio was still 30% above the median. It is now back on the verge of re-entering bubble territory (30x).
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On April 24 a Zweig Breadth Thrust fired. Only 16 signals since 1950, all 16 had the stock market up both six months and a year later. Average of 23% up a year later. 🧐. Via @LeutholdGroup.
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RT @GunjanJS: 'It’s. worth considering that 'this time' might well be the same as it ever was, and the recent market plunge could morph in….
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Value In Play? Last week’s losses were a mass liquidation with no differentiation between Growth and Value. Regardless, a rotation from the former to the latter appears underway. and the most reliable catalyst for a leadership change is a bear market.
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A Terribly-Timed #Tariff Tantrum: The U.S. economy was in no position to absorb a minor shock, let alone the second coming of the Smoot-Hawley Tariff Act of 1930.
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