One of the key ratios I am watching is the Russell Value/Growth ratio.
It tends to pivot shortly before the end of each market cycle, but the pandemic shutdown disproportionally affected value stocks this time, so the question is whether it will pivot during/after this one.
It tends to pivot shortly before the end of each market cycle, but the pandemic shutdown disproportionally affected value stocks this time, so the question is whether it will pivot during/after this one.
Looking at the latest chart, there are signs of consolidation and a potential bottom, but no clear confirmation.
We've seen these attempted bottoms in the charts in recent years, which ended up not being "the bottom", but they weren't during recessions.
We've seen these attempted bottoms in the charts in recent years, which ended up not being "the bottom", but they weren't during recessions.
I like to look at equal-weight S&P 500 vs market-weight S&P 500 as well.
Equal outperforms over the long run but tends to have periods of underperformance leading to and during recessions as market leadership changes.
(The #1 stock in SPX in the previous recession was $XOM)
Equal outperforms over the long run but tends to have periods of underperformance leading to and during recessions as market leadership changes.
(The #1 stock in SPX in the previous recession was $XOM)
Looking at equal-weight vs market-weight S&P 500 lately, there has been a pretty solid bottom forming.
So basically what I'm watching for is either confirmed breakouts or failed breakouts when it comes to Russell value-vs-growth and S&P 500 equal-vs-market-weight.
