It’s pretty simple. Growth stocks do not perform well when indicators like a strengthening US Dollar, rising interest rates, and slowing growth take place.
Hence, see the chart above
This is a ratio of the Growth Stocks ETF (VUG) to the Value Stocks ETF (VTV). And it’s a bit ugly of late.
As you can see, the Growth/Value ratio double topped and headed decisively lower. It’s currently trading well off the highs as the aforementioned market environment has not been good for growth oriented stocks.
So, will it get worse? Better? Well, a big test is taking place at (2) on the chart below. The ratio is testing it’s up-trend line and price area of prior months closing lows. A close this month below the up-trend line would be bad news.
What happens at (2), might go a long way in determining if the growth story is in real trouble… or ready to bounce back. Stay tuned!
This article was first written for See It Markets.com. To see the original post CLICK HERE.