Leuthold's Major Trend Index held at Neutral for the week, with Valuation, Cyclical, and Sentiment all reading negative and Technical the lone positive. Mega-cap tech drove the week's volatility disappointing Google and Tesla earnings sparked the Mag 7's worst daily drop (-4.6%) since April 2025's tariff rollout, extending a stretch where the group has trailed the average S&P 500 stock by roughly 20% since last Halloween. The broader market shrugged it off, with the S&P 500 closing near the middle of its 5% trading range of the past 50 sessions. Meanwhile, oil (+26% month-to-date) and rates (10-year yield +25bps) continued climbing, tightening the Cyclical picture further, and the S&P 500's five-year normalized P/E has now sat above the 30x "danger zone" for 26 straight months — a level Leuthold notes has preceded major corrections before, even as strong earnings growth (+15% annualized) has kept the market range-bound rather than falling.
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