On a total return basis, the S&P 500’s February loss of 0.8% was its first monthly decline since last April. However, the equal-weighted S&P 500 advanced 3.5%. The resulting performance gap, in favor of the average stock, is the largest since April 2009, when the market blasted off the GFC lows.

Since Halloween, RB Value (+14%) has dominated RB Growth (-7%); it was the best four-month stretch for RB Value relative to RB Growth since April 2022. During that time, the change in valuation is unmistakable—with Large Value now much less of a bargain.

The equal-weighted S&P 500’s +4% return in February outperformed the S&P 600’s +2%, pushing the Ratio of Ratio’s valuation gap to its widest margin since September 2024. A declining P/E multiple for the median Small Cap in our L3000 universe was also at play, migrating from 21.4x to 20.0x.

The Up/Down ratio for the second month of Q4 reporting is 1.80. Aside from a slight hiccup last spring, this Up/Down work has consistently grown for the past nine quarters. The vignette has now reached a level that has previously been very difficult to maintain, especially since the GFC.

With S&P 500 Q4 reporting winding down, estimated operating EPS is now 6.9% higher than at the start of the year.

Read this week's Major Trend. 

The Leuthold Major Trend Index tracks eight sentiment surveys; four from the Conference Board covering consumer confidence and four industry measures of investor convictions. Each of these are contrarian signals, meaning that negative sentiment often relates to stronger equity markets while positive sentiment leads to weaker markets. We periodically review the effectiveness of each signal in the MTI, and this study takes a fresh look at a group of indicators related to consumer confidence and investor expectations.

Read this week's Major Trend. 

Read this week's Major Trend. 

January marked a constructive start to 2026 across the platform. Core benefited from strengthening breadth and solid fixed income returns, while Select Industries continued to capitalize on the rotation away from narrow mega-cap leadership. Even Grizzly, despite a modest decline, identified pockets of disruption and cyclical opportunity. As market leadership broadens and momentum leadership shifts, our strategies remain positioned to adapt.

Read this week's Major Trend.

Markets are changing and our strategies are adjusting accordingly. Core gained from improving breadth and balanced positioning, Select Industries navigated a decisive rotation toward cyclicals and commodities, and Grizzly continued uncovering structural disruption themes beneath the surface. With mega-cap momentum fading and leadership broadening, flexibility remains our advantage.

The Equal Weighted S&P 500 (+3.4%) had its best month versus the S&P 500 Top 10 Index (-0.9%)since March 2025. Poor results coming from MSFT (-11%), AAPL (-5%), and Broadcom (-4%) dragged down the once bulletproof Top 10. The average stock in the S&P 500 has now outperformed the largest ten for three consecutive months, with David beating Goliath by 8.5% during that span.

Since Halloween, RB Value (+12%) has been on a tear compared to RB Growth (-5%)—the best three-month stretch for RB Value relative to RB Growth since the start of 2022.

Despite all the talk about Small Caps ripping higher, the Ratio of Ratios narrowed only 1%. The S&P 600 (best SC proxy for this vignette) started 2026 off with a 5.6% gain. The Equal Weighted S&P 500 (best LC proxy), advanced 3.3%.

The first Up/Down ratio for Q4 is 2.63. Once again, this is another new high for the “one-month” ratio measured back to the amazing earnings growth following the 2020 EPS washout. Given the results of the past three quarters, this “contemporary record” storyline in our Up/Down work is feeling repetitive.

Seasonality and the powerful alignment of fiscal support and monetary easing should provide a favorable backdrop.

The commencement of Trump’s two terms were separated by eight years, a global pandemic, trillions in stimulus, and the quiet burial of several macroeconomic and civic assumptions once thought indestructible. While the personalities and rhetoric remain familiar, the economic backdrop, policy constraints, and market sensitivities of 2025 bore little resemblance to those of 2017.

Financial markets mimicked Mother Nature in the fourth quarter, drifting into a kind of hibernation. Style returns were rangebound around zero, and the spread between returns was about as narrow as we can recall. Active portfolio performance shows there wasn’t much to pick from to add significant value.

A small-cap bounce in January is arguably the best-known of all stock market anomalies, but for much of the last decade it’s been a flop. This year, it was back in full force... until it faded. Despite giving back some of its sizzle in late January, the Russell 2000 ended the month with a 4% advantage over the S&P 500—its best January since 2023.