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Take-Aways:

The trends for the key themes and relationships that we track have become slightly more bearish over the past week. Of note, Semiconductors are on the verge of testing important relative support, and a breakdown would not be a welcome development for equity bulls. Other trends are holding above support but have moved lower this week. Investors are still more risk-averse.  

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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 50 and 200-day moving averages. The 14-day RSI of the ratio is holding in a bearish regime and now threatens to break below the 40-level. Note that this indicator has been overbought since November, highlighting the fact that momentum is with the bearish price trend.

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

High Beta vs Low Volatility

The High Beta/Low Volatility ratio has fallen below the 50-day moving average and remains below the 200-day moving average 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 yet to be able to push the 14-day RSI out of a bearish regime.

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

Consumer Discretionary vs Consumer Staples (Equal Weight)

The Discretionary/Staples ratio has broken below the 50-day moving average as the 200-day moving average moves into line with price-based resistance. The ratio is still trying to build a base, but there are now higher odds that the June lows will be tested. Momentum remains with the bearish price trend as the 14-day RSI has been rejected at the 60-level and has broken the uptrend from the May lows.

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 fighting hard 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 little upside momentum for Small Cap bulls.

Copper / Gold chart for March 25th research.

High Yield vs Treasuries

The High Yield to Treasuries ratio remains stuck between support and resistance and is now below the 50 and 200-day moving averages. 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 continues to test but has not broken price-based support below the 50 and 200-day moving averages. The 14-day RSI is in the middle of the range but remains in a bearish regime. We also note that the RSI has been making lower highs since December.

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, a downside bias exists with the RSI still trading in a bearish regime.

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