fbpx

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

This daily note IS brought to you by Research by Potomac. Access the full Advisor toolkit and get a deeper look at the markets.

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 / Low Volatility chart for March 25th research.

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.

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

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.

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 around the 50 and 200-day moving averages. The 14-day RSI is in the middle of the range, confirming the neutral price trend.

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. 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 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.

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

This daily note IS brought to you by Research by Potomac. Access the full Advisor toolkit and get a deeper look at the markets.

Potomac Fund Management ("Company") is an SEC-registered investment adviser. 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. The company does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to the Company website or incorporated herein, and takes no responsibility for any of this information. The views of the Company are subject to change and the Company is under no obligation to notify you of any changes. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable or equal to any historical performance level.