The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Stocks

10% Downside Risk For Stocks as Value Takes The Lead

by admin April 25, 2024
April 25, 2024
10% Downside Risk For Stocks as Value Takes The Lead

Value taking the lead from growth

The weekly RRG above shows the rotation for Growth vs Value stocks. The benchmark is the DJ US index. The recent rotation clearly shows the rotation out of growth into value, taking shape and picking up steam. For now, Growth is still positioned on the right-hand side of the RRG, but the $DJUSGR tail is rapidly heading toward the lagging quadrant at a negative RRG-Heading.

The daily version of this RRG underscores the preference for Value stocks.

The $DJUSVA tail dropped into the weakening quadrant after a rotation through leading since mid-March and sharply hooked back up after one day inside the lagging quadrant and is now returning into the leading quadrant, supporting a further strengthening for the Value tail on the weekly time-frame.

$SPX usually tracks the Growth/Value ratio pretty good

Plotting the Growth/Value ratio on top of the price chart for $SPX shows that they have tracked each other quite well over time. This is a monthly chart, so we’re discussing long-term trends here.

The main takeaway here is that the S&P usually does well when the growth/value ratio goes up and less well when the ratio moves lower.

With the RRG currently showing a strong preference for Value stocks, caution is warranted as this might be the precursor for a further decline in the S&P 500 itself.

The preference for value over growth shows up across all size segments

When we break down the Growth and Value segments into their respective size buckets, we get the RRG above. This shows that value beats growth across all size segments. Large-, Mid-, and Small-cap Value tails are all inside the improving quadrant and moving at a positive RRG-Heading.

The growth tails are slightly more divided, but all three are on a negative RRG-Heading, with large-cap growth showing the fastest deterioration. Mid-Cap is the most stable, with its short tail just inside the weakening quadrant. While small-cap growth stocks have rolled over inside the leading quadrant and are starting to head lower on both scales.

All in all, this underscores the need for caution regarding price developments for the S&P 500 in the coming weeks.

5%-10% downside risk within long-term uptrend

On the weekly chart, SPY found support at the level of the former rising resistance line at around 494. More important support is found at the level of the January-2022 peak at 480, and in case that breaks, the area around 460 will provide another solid support area. With the current longer-term trend of higher highs and higher lows still firmly in place, we have to conclude that the uptrend is still in play.

But at the same time, we have to realize that within that uptrend, a 5-10% decline is perfectly possible.

The more detailed daily chart of SPY shows that the decline from the recent peak at 524 back to the low near 495, which is one move lower on the weekly chart, is already showing lower highs and lower lows, which means that rallies now have to be seen as up-ticks within a downtrend until this structure changes again.

The green-shaded areas represent the support levels mentioned on the weekly chart. New buying opportunities within the long-term uptrend should start to arise in these ranges.

Rotation into defensive sectors confirms risk-off

Finally, the daily RRG for defensive sectors shows a rapid rotation into Health care, Consumer Staples, and Utilities in the last two weeks of trading, which confirms the need for caution in the coming weeks.

#StayAlert, –Julius

0
FacebookTwitterGoogle +Pinterest
previous post
New poll reveals how voters’ views on abortion have changed as Dems seek to make issue a central 2024 theme
next post
Three Sectors are Showing Strength, Three are Not

Related Posts

My Downside Target for the S&P 500

March 11, 2025

DP Trading Room: What’s Up With Semiconductors?

May 21, 2024

Unbelievable! The Fed Creating Its Own Nightmare And...

August 2, 2024

A Few Charts Worth Watching This Week

June 10, 2025

Sector Rotation & Seasonality: What’s Driving the Market...

March 6, 2025

Strongest Top 3 S&P 500 Stocks: Will They...

January 3, 2025

DEFENSE IS ON THE FIELD | GONOGO SHOW...

April 27, 2024

The Best Five Sectors, #27

July 15, 2025

Simpler Charts, Better Results? Use This Trick to...

July 17, 2025

How I Find Up-trending Stocks Every Week (Step-by-Step...

June 4, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • China outlines more controls on exports of rare earths and technology

      October 11, 2025
    • The Real Drivers of This Market: AI, Semis & Robotics

      October 11, 2025
    • S&P 500 Breaking Out Again: What This Means for Your Portfolio

      October 11, 2025
    • White House turns to expanding Abraham Accords after Israel-Hamas ceasefire

      October 11, 2025
    • Georgia’s Mike Collins needles Ossoff in new ad over shutdown’s toll on airports, workers

      October 11, 2025
    • Bondi announces arrest of ‘coward’ who allegedly threatened conservative influencer following Kirk’s murder

      October 11, 2025

    Categories

    • Business (1,417)
    • Politics (4,710)
    • Stocks (1,701)
    • Uncategorized (45)
    • World News (1,410)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thetraderharbor.com | All Rights Reserved