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.
My regular blog is the RRG Charts blog. If you would like to receive a notification when a new article is published there, “Subscribe” with your email address.