Take-Aways:
Once again, we are hard-pressed to point out much that has changed in the key relationships that we track. We are keeping an open mind; there has been a slight improvement in some of the themes, but not enough to claim that investors have shifted to a risk-on stance. We are most intrigued by the Semiconductor ratio holding support
Key Themes and Relationships
Semiconductors vs. S&P 500
Semiconductors are holding support relative to the S&P 500 but remain below the declining 50 and 200-day moving averages. The 14-day RSI is still in a bearish regime despite not becoming oversold last week. Perhaps there is a base building, but it is too soon to call all-clear. Holding support is a good first step.
High Beta vs. Low Volatility
The High Beta/Low Volatility ratio is now between the moving averages after a rally this week. The ratio remains trapped between price-based support and resistance. We are still waiting on a directional break, and the 14-day RSI needs to provide more insight here.
Consumer Discretionary vs Consumer Staples (Equal Weight)
The Discretionary/Staples ratio has regained the 50-day moving averages, while trading below the declining 200-day moving averages. There is price-based resistance at the pre-COVID levels that must be overcome before we can claim that the trend has turned in favor of risk-on. The 14-day RSI is holding in a bearish regime.
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.
Small Caps vs Large Caps
The Small Cap/Large Cap ratio remains between price-based support and resistance as it trades around the 50 and 200-day moving averages. The 14-day RSI is in the middle of the range, confirming the neutral price trend.
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.
Lumber vs Gold
The Lumber/Gold ratio is breaking support below the declining 50 and 200-day moving averages. The 14-day RSI has been making lower highs since December and remains in a bearish regime.
Copper vs Gold
The Copper/Gold ratio continues to trade in a neutral position between support and resistance but below 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.
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