There is no denying a very impressive rally in the S&P 500 over the past couple of weeks, but there is also no denying that things are not universally in good shape – that some of the underpinnings of a sustainable Bull market are showing signs of weakness. This letter presents some of the good and some of the bad in the stock market story.

We have been publishing this data to you for some time, but the format today is different (hopefully easier to read and quickly scan). We also added a few more indicators that help add depth and color to the market conditions.

Let’s look at these observations one at a time, with data.

We are using a 200 point conditions rating scale from minus 100 (strong Bearishness) to positive 100 (strong Bullishness), with zero in the middle for a neutral indication.

We rate the overall US large-cap stock market by these indicators at about positive 33 (moderately Bullish). The weights within the overall rating are:

The fundamental data has two main parts: intermarket Impact Factors, and Company Operations.

The Intermarket Impact Factors are primarily a set of interest rate data that drives the economy, profits and stock investment behavior in various ways – all translating in the end to changes in stock valuation levels. The data consists of Treasury yield curve data, junk bond spreads versus same duration Treasuries, and multi-factor financial market stress indexes from the St Louis Fed and the Cleveland Fed.

The Company Operations data consists of earnings growth, profit margins and sales growth – bedrock core fundamental data driving stock prices.

The weights within the Fundamental section are: