Key Points

  • Semis Search for a Clear Direction in the Near-Term
  • High-Beta is Holding Support vs. Low-Volatility
  • Copper/Gold Ratio Can’t Breakout
  • Is the Growth/Value Relationship Stalling?
  • Small Caps Face Plenty of Upside Resistance vs. Large Caps

Chart in Focus:

The chart of the S&P 1500 Semiconductors & Equipment Index relative to the S&P 500 does a good job of painting the picture of the current market environment. One where the long-term trend is bullish, but the short-term and intermediate-term trends are choppy in many cases. The ratio is oscillating around the 50 and 200-day moving averages while the 50-day can’t seem to find a clear direction. The 14-day RSI confirms this indecision as it trades in the middle of the range.

The following relationships can help give us a sense of the level of risk appetite on the part of investors.

High Beta vs. Low Volatility

The ratio of the S&P 500 High Beta Index relative to the S&P 500 Low Volatility Index remains above support, after a brief trip below to test the rising 200-day moving average. The next test on the upside will be the declining 50-day moving average as the ratio continues to trade in a consolidation. The 14-day RSI recently became oversold for the first time since March 2020 and the subsequent rebound has not been enough to push the indicator out of a bearish regime.

Consumer Discretionary vs. Consumer Staples (Equal Weight)

The ratio of Consumer Discretionary stocks relative to Consumer Staples stocks is knocking on the door of a breakout as we enter the final trading day of July. The ratio is above the rising 50-day moving average after holding support at the bottom of the range. The rising 200-day moving average is now in line with that support zone as well. The 14-day RSI is in the middle of the range, confirming the consolidation that has been in place since March, but we note that it is making another lower high, failing to confirm price strength.

We use the equal weight indexes to neutralize the large weight AMZN carries in the Discretionary sector. That stock is under pressure today following their earnings report last night.

Copper vs. Gold

The Copper/Gold ratio pushed into the resistance zone this week but has thus far been unable to breakout. The ratio remains in a consolidation, above the moving averages but trading has been choppy since February of this year. On the move higher this week, the 14-day RSI did not become overbought, signaling that rangebound trading is likely to persist in the near-term.

Lumber vs. Gold

The Lumber/Gold ratio is holding above support for now after finally stabilizing the freefall that has been in place since early May. The declining 50-day moving average is on the verge of crossing below the flat 200-day moving average, both of which are in line with overhead resistance currently. After such a large decline, odds are that time will be needed before the ratio can make meaningful headway to the upside.

The themes below can show us where investors are allocating capital within the equity market.

Growth vs. Value

The Growth/Value ratio for the S&P 500 is fading a bit, retesting broken resistance after pushing through last week. The ratio remains above the 50 and 200-day moving averages, with the former on the verge of crossing above the latter. The 14-day RSI is pulling back from overbought levels but continues to trade in bullish ranges, keeping momentum to the upside. Below resistance, the moving averages are a logical support level to test.

Small vs Large

The ratio of Small Caps to Large Caps remains below resistance, the 50-day moving average, and the 200-day moving average. At the same time, the 14-day RSI is in a bearish regime after becoming oversold for the first time since March 2020. Until the resistance and the moving averages are broken to the upside, the path of least resistance remains lower.


While the S&P 500 and the NASDAQ 100 trade near record highs, there remains a lot of choppiness under the surface. Key themes used to measure risk appetite on the part of investors are trapped in consolidation ranges. At the same time, Growth is having a hard time following through on recent strength relative to Value.  Broad exposure to the equity market makes the most sense to us until the “calm on the surface but turbulent below” dynamic is alleviated, and clearer trends develop.
Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.