Value Crushing Growth

The DJIA is barely down at the moment while the Nasdaq is almost down 1 percent. Value has been crushing growth all year and outperformance has accelerated during the rally from 3500.

Value-Growth ETF Ratios

It still looks like a major relative low in value was made.

Another Way to Look at a Bounce

Here are two price ratio charts of value-growth ETF pairs from Vanguard and Invesco. Different scenarios can drive a reversal or continuation. The charts reverse on bear market rally as beaten down stocks gain the most. They also reverse if energy and commodities lead the next leg down in the bear market. It breaks out if the inflation story accelerates from here.

Growth-Value Double Top

Ratio of Vanguard Mega Cap Growth to Mega Cap Value.

What Inflation? Value Gives Up Recovery vs Growth

The charts show pairs of growth and value ETFs, with the value as the numerator. Value stocks usually include energy, industrials, financials and materials. Growth is dominated by technology companies in various sectors (Amazon, Google, Facebook and Tesla are all tech companies to me, but they are in three separate sectors). It shows the market has almost completely reversed the relative gains in value shares since the low in 2020 when value stocks implodoed during the pandemic panic and technology stocks soared thanks to the lockdowns and the Federal Reserve. Value stocks then rallied strongly on inflation concerns, rising commodity prices, rising interest rates, etc.