Key Points

  • High Beta vs. Low Volatility Remains Trapped
  • Discretionary vs. Staples Fades from the 200-Day Moving Average
  • Copper/Gold Battle Rages Without a Clear Winner
  • Lumber/Gold Still Solid
  • Growth Breaks Down vs. Value

Key Themes and Relationships

High Beta vs Low Volatility

The High Beta to Low Volatility ratio remains pinned between support and the declining 50 and 200-day moving averages in the consolidation that marked trading for the majority of 2021. The 14-day RSI has shifted to a bearish regime, recently becoming oversold and unable to hold above 50 on rally attempts. These dynamics increase the odds that the ratio will break to the downside, but we will continue to watch for confirmation via price.

Consumer Discretionary vs Consumer Staples (Equal Weight)

The ratio of Consumer Discretionary stocks relative to Consumer Staples stocks remains below the declining 50 and 200-day moving averages, as the defensive Staples have been exhibiting strong performance over the past month. There is still a downside before an important support level is reached. The 14-day RSI has been making lower highs after failing to become overbought, indicating that the current move lower is supported by momentum.

Lumber vs Gold

The Lumber/Gold ratio was stronger again this week. The 50-day moving average is above the 200-day moving average, and both should now be considered support should a pullback begin to take hold in the near term. These are important levels to watch with the 14-day RSI overbought.

Copper vs Gold

The Copper/Gold refuses to tip its hand on a break as the two sides battle for control. The ratio is in-line with the 50 and 200-day moving averages. Price-based support continues to hold while the 14-day RSI sits in the middle of the range, confirming the neutral trend.

Small vs Large

Small Caps remain in a downtrend but have fought their way back to broken support relative to Large Caps. The ratio is also below the declining 50 and 200-day moving averages. The 14-day RSI also remains in a downtrend and a bearish regime. While we are not ready to make a case for small over large, we must respect that the ratio is now at a key level. Put this one front and center.

Growth vs Value

Last week we wrote that we were mindful of the levels that would invalidate our view on the Growth vs. Value theme. This week we can say that two of those levels have been broken. The ratio has moved below price-based support and the 50-day moving average. This leaves the 200-day moving average as the last line of defense. Price weakness is confirmed by momentum as the 14-day RSI has moved below 40 and is on the verge of an oversold reading.  


The biggest change in the first week of the new year is the breakdown in the Growth vs Value theme. The question is, will that translate into better performance for Small Caps vs. Large Caps?

Disclosure: 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.