Key Points
- Copper/Gold Ratio Shows Signs of Life
- Lumber/Gold Regains a Key Moving Average
- Discretionary Remains Weak vs. Staples
- Large Over Small is an Enduring Theme
- Odds Favor Downside for Growth vs. Value
Key Themes and Relationships
High Beta vs Low Volatility
The High Beta to Low Volatility ratio has shown some signs of improvement this week, moving above the 50 and 200-day moving averages after a successful test of support. The 14-day RSI is trying to break from a bearish regime as it pushes up against the 60 level.
Consumer Discretionary vs Consumer Staples (Equal Weight)
The Discretionary vs. Staples ratio is beginning to stall below the declining 50 and 200-day moving averages. The 14-day RSI is also rolling over and remains in a bearish regime. Until the moving averages are reclaimed, the bears are in control, sending a “risk-off” message.
Lumber vs Gold
The Lumber/Gold Ratio has retaken the 50-day moving average while holding above the 200-day moving average. Price is consolidating after a strong move from the September lows. The 14-day RSI is making lower highs, indicating that upside momentum may be waning.
Copper vs Gold
The Cooper/Gold ratio is showing signs of life this week, moving higher after battling the moving averages for the past 14 months. Technically, the ratio remains in consolidation, and momentum is still neutral, but we are intrigued, nonetheless. Continued strength here would likely weigh on fixed income prices, sending yields higher.
Small vs Large
Small Caps remain under pressure relative to Large Caps again this week below the declining 50 and 200-day moving averages and broken support (now resistance). Momentum confirms this weakness as the 14-day RSI continues to trade in a bearish regime. The bullish divergence that we highlighted last week remains in play but will only interest us if the ratio clears resistance.
Growth vs Value
The Large Cap Growth vs. Value theme remains below the 200-day moving average. The 50-day moving average is moving to the downside but remains above the 200-day moving average for now. The 14-day RSI is in a bearish regime and is in the process of making a lower high. Odds continue to favor a move toward lower support.
Take-Aways
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