One of the most exciting and relentless investing trends of the past 4 years is the strength in growth stocks versus value stocks.
But that trend is in jeopardy… and may be signaling caution to the broader market as high beta growth stocks continue to slide in 2021.
Today’s “monthly” ratio chart of growth stocks (VUG etf) versus value stocks (VTV etf) says it all. The steep rise in this ratio hit resistance at (1), where weakness began to take place. This lead to a break down below the rising trend channel support.
After further selling, the ratio tested old support (now resistance) at (2)… and turned lower once more. Weakness has continued into this month and the ratio is attempted to break below recent lows at (3).
It’s time for growth stocks to make a stand versus value stocks. Otherwise, it may be game over for growth stocks… and perhaps the current bull market trend. Stay tuned!