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Take-Aways:

Despite a volatile week of trading in the equity and fixed income markets, there has been little change in the key themes and relationships we track. The slightly more bearish bias that we called out last week led to an undercut of the June lows for the S&P 500 this week. That bearish/risk-off bias remains in place, and we note the Lumber/Gold ratio is breaking support, adding further support to our views. 

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Key Themes and Relationships

Semiconductors vs. S&P 500

Semiconductors remain under pressure relative to the S&P 500, trading below the declining 50 and 200-day moving averages. The ratio is testing support, and a break would be further bearish development. The 14-day RSI of the ratio is holding in a bearish regime and has not been overbought since November 2021; momentum remains with the bearish trend.

High Beta / Low Volatility chart for March 25th research.

High Beta vs. Low Volatility

The High Beta/Low Volatility ratio remains below the 50 and 200-day moving averages as it trades in a consolidation zone. A break of support could signal the next stage of risk aversion in the market. Rally attempts this year have not been able to push the 14-day RSI out of a bearish regime.

Discretionary / Staples (EW) chart for March 25th research.

Consumer Discretionary vs Consumer Staples (Equal Weight)

The Discretionary/Staples ratio is holding below the 50 and 200-day moving averages. Resistance remains at the pre-COVID consolidation zone, a level that must be overcome to begin to claim that risk appetite is returning to the market. The 14-day RSI is holding in a bearish regime.

Discretionary / Staples (EW) chart for March 25th research.

Growth vs Value (Large Cap)

The Growth/Value ratio remains below the 50 and 200-day moving averages. The ratio is holding above price-based support, and the 14-day RSI is holding at the 40-level. The trend is neutral with a cautious bias. Growth bulls need to see a move above the moving averages to have more confidence in sustained leadership.

Lumber / Gold chart for March 25th research.

Small Caps vs Large Caps

The Small Cap/Large Cap ratio remains between price-based support and resistance as it trades below the 50 and 200-day moving averages. The 14-day RSI is in the middle of the range, confirming the neutral price trend. However, the series of lower highs for the indicator signals that the bears are maintaining momentum.

Copper / Gold chart for March 25th research.

High Yield vs Treasuries

The High Yield to Treasuries ratio continues to trade between support and resistance below the 50 and 200-day moving averages. Bulls want to see support hold as a break could signal further unwinding of risk in the market. The trend here remains neutral, confirmed by the 14-day RSI trading in the middle of the range.

Small Caps / Large Caps chart for March 25th research.

Lumber vs Gold

The Lumber/Gold ratio is breaking support below the declining 50 and 200-day moving averages. This is a sign of continued risk aversion in the market. The 14-day RSI has been making lower highs since December and remains in a bearish regime.

Growth vs Value (Large Cap) chart for March 25th research.

Copper vs Gold

The Copper/Gold ratio continues to trade in a neutral position between support and resistance and the moving averages. The trend is confirmed by the RSI sitting in the middle of the range. However, there is a downside bias with the RSI still trading in a bearish regime.

Growth vs Value (Large Cap) chart for March 25th research.

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