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Take-Aways:

The themes that we track remain in a neutral position. Many are stuck between support and resistance and/or the 50 and 200-day moving averages. The bearish case for equities is supported by the fact that many of the ratios are below declining 200-day moving averages. Bulls will argue that key support levels are holding as downside momentum continues to wane. This leaves trends stuck in neutral.

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Key Themes and Relationships

High Beta vs Low Volatility

The High Beta/Low Volatility ratio remains trapped between support and resistance and between the 50 and 200-day moving averages. This theme remains in a neutral position, but we note a subtle shift playing out as the 14-day RSI has not become oversold on recent bouts of weakness. This could indicate that downside momentum is waning.

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

Consumer Discretionary vs Consumer Staples (Equal Weight)

The Discretionary/Staples ratio continues to test support at the 50-day moving average while trading below price-based resistance and the falling 200-day moving average. It appears that the ratio is building a base after a steady decline for most of the year. The 14-day RSI has been making higher lows since May, but we need to see a break above the 200-day to believe that risk appetite is returning to the market.

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

Growth vs Value (Large Cap)

The Growth/Value ratio remains below the 50-day moving average after failing to push above the 200-day moving average during the June-August rally. 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.

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 moving below 40, signaling the potential for support to be tested. The trend is neutral, with a slight downside bias.

Copper / Gold chart for March 25th research.

High Yield vs Treasuries

The High Yield to Treasuries ratio remains stuck between support and resistance and the 50 and 200-day moving averages. The 14-day RSI has held at the 40 level and now sits in the middle of the range. The trend is neutral.

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 has moved to the middle of the range after holding above 40 this week. If this ratio is going to make a turn to the upside, this is a logical spot for it to begin.

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

Copper vs Gold

The Copper/Gold ratio is holding its test of the 50-day moving average below the declining 200-day moving average as it trades between support and resistance. The 14-day RSI remains in a neutral position, holding above the 40-level.

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

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