If there is one chart we should be watching at the moment, it should be, IMHO, the ratio between Growth and Value stocks.
The image above shows this relation on a weekly chart going back 15 years. After a multi-year rising trend and an almost exponential acceleration in 2019-2020, a massive double top formation was completed in mid-April. After the initial acceleration lower, the possibility for a recovery, potentially back to the breakout level, is increasing, maybe even likely. But don't get fooled by such a move back up, thinking that it will be the continuation of the trend we have seen in the past.
Clear-cut topping formations, such as we are witnessing here, don't come by very often, so I am taking the message very seriously.
For the time being, Value is in charge, and rallies are to be seen as recoveries within the existing downtrend.
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Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
Creator, Relative Rotation Graphs
Founder, RRG Research
Host of: Sector Spotlight
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