Today, I want to share the chart below that is very interesting (to me), since it measure the relative strength of the iShares Russell 1000 Value ETF (banks, energy, and many commodity-based stocks) to the iShares Russell 1000 Growth ETF (Technology & Healthcare). In the representation below, an up-trend means value is doing better and a down-trend means growth is doing better.
Generally, investors don't change their stripes. If they are value investors, they typically buy the lower P/E or lower price-to-sales types of stocks in all seasons, and vice versa for growth investors. The bottom of the bear market in 2009 (from beginning to end) has generally been one that rewarded the growth investors the most, however, as shown in this graph below that may be changing.
In fact, for the last few months (since April) the action of the value stocks has continued to shine a little brighter than for growth.
As this earnings season comes around, this trend will be very interesting to watch, but the recent upside break-out in the relative strength of value stocks seems to indicate a new trend for a few months ahead.
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