Do you ever have one of those moments where you kick yourself and ask "Why didn't I do that sooner?" I had one of them a couple of days ago as I started to assemble some interesting information -- and charts -- of earnings trends and projections for indices other than the S&P 500. While it bugged me for me, it really gnawed at me for you since this is information that could quietly do each of you a lot of good. What I'm talking about are the earnings trend and outlook for the S&P 400 mid cap index and the S&P 600 small cap index. We keep closest tabs on the S&P 500's corporate earnings information, simply because that encompasses the majority of the market. What we should've been doing more of, however, is taking a broader look at the market as a whole and pinpointing the areas that differ from the norm. Right now, the S&P 600 and the S&P 400 (including their earnings data) look considerably different than the picture the S&P 500's earnings trend paints. Color me surprised... seriously. We'll look at the information below, though perhaps it would be more accurate to say we'll start to look at the information below - as I started to dig I uncovered a whole treasure trove of information that we just can't work through in one newsletter. We'll have to space it out. Before we get to it though, there's one news item from Patriot One Technologies (CVE:PAT, PTOTF) we want to share with you today. Bryan Murphy gave us the whole scoop at the website this morning, so we'll ultimately refer you to his commentary if you want all the nitty-gritty details. For here, we'll just sum it up by saying the company's weapons-detection device is even more powerful than most investors may have first thought. As a quick refresher, Patriot One Technologies is the name behind a weapons-detection device called the CMR 1000. Think of it as a combination of an x-ray machine and a metal detector, but better than both. Using microwaves that are harmless to humans, the CMR 1000 can determine not only the presence of a large metal object (even within a moving crowd of people), but determine exactly what kind of weapon it may be. The newest twist to the technology was confirmed today. Per the press release, the CMR 1000 system can determine and photograph the wielder of a weapon it has detected, getting security personnel a crystal clear picture not just of the weapon, but who's holding it. This nuance makes the system something any would-be attacker or terrorist doesn't even want to test. Unlike alternatives, not only is an attack thwarted before it's allowed to unfurl, a detection -- even if an attacker changes his mind and flees -- gives police and other security agencies a picture of someone who merely threatened with an attack. Patriot One Technologies has already established its manufacturing relationships so it can hit the ground running once it unveils a finished product this April. We don't think generating sales is going to be a problem in the least. Our bigger concern is, or was, whether or not the company will be able to keep up with demand. That matter seems to have been taken care of as well. In any case, as we promised you last week, this week we want to open up a dialogue regarding the earnings performance of mid caps and small caps. As it turns out, their pictures don't look all that much like the earnings picture of their large cap counterparts. We'll go ahead and concede right up front that while today's charts of both indices are powerful, the biggest benefits to you will come when we deliver the comparable charts at the sector-level. With that kind of detail you can truly ferret out the market's hot spots and cold spots. We've already taken a preliminary look at much of the information, and we don't mind telling you we were bit shocked at how different some of the small caps in a particular sector looked compared to their large cap counterparts. We'll talk more about that when the time comes though. For today, let's just start the discussion with a look at the S&P 600's earnings trend and projection [the arrow marks Q4's data].... ... and the S&P 400's earnings trend and projection. Like the S&P 500, both small caps and mid caps started an earnings recovery at the beginning of 2016. Unlike their large cap brethren though, small caps and mid caps are recovering a lot better and a lot faster. Now, philosophically speaking, this shouldn't come as a complete surprise. Small caps and mid caps are supposed to be faster growers - they're nimble and usually have something new to offer consumers or companies. This is a remarkable pace of earnings progress though... one I wish I had kept better tabs on before now. It doesn't show up on either chart, but I will let you know the S&P 600 is now trading at a forward-looking P/E of 21.13, and the S&P 400 is valued 20.9 on a forward-looking basis. Both valuations are below long-term norms. The question you have to ask yourself is, do you really think either index will be able to reach their lofty 2017 expectations? I'm inclined to say no, just knowing companies and analysts tend to reel in their expectations as time passes. On the other hand, the projected pace of earnings growth doesn't look terribly different than the pace of earnings growth we've seen over the course of the past four quarters. Maybe it's not crazy. Even if we fall a little short of expectations, we're still putting up impressive growth numbers. I think it's all going to boil down to how well oil prices perform this year and next, as the mid cap and small cap energy names are still in the red. On that note... Just to give you a little teaser about what to expect as we work our way through some of the small cap and mid cap highlights, here's a look at the S&P 400 Energy Sector Index's performance history and earnings trend. This visualization tells you a lot about what's really going on here, and what it may take to drive the expected improvement in overall earnings. Just for some perspective, I added the price of oil (CL-065) onto the chart. We can see earnings progress being made here, but not enough. The group isn't expected to get back into the black until the latter half of this year, and even then it's a "just barely" situation. We can also see on this chart's history that oil had to be above $80 per barrel for the mid caps in the energy sector to collectively turn a profit. I think realistically we can presume these companies are running leaner ships now than they were then, but I doubt these names are going to get back to profits with crude still in the mid-$50's. I think we'll need to see oil above $70 per barrel for mid cap energy names to collectively turn a profit, which is what the earnings forecasts here are assuming. That's a big assumption though. And, just to help you start getting a firm grip on where all the mid cap sector indices have been and where they're going, here's a look at the performance comparison of them all since the middle of 2014, when the energy sector unraveled yet not everything else did. [Oh, and if you're color blind, the percent-change data is to the right of each, so you can track where each group is now, and back-track as needed.] Something curious on this chart that isn't related to energy.... the telecoms in this group seem to be perking up rather well. We may have to take a closer look at that strength soon. Anyway, you can see the power of these charts, which is why you'll want to stay tuned this week (and probably next week as well) while we hone in on some of the more telling stories and dissect many of the other mid cap and small cap sectors now on our radar.