A big development in recent days is the relationship between Growth and Value.
Q2 was all about tech. Growth dominated. And while we do think Growth still has legs — especially in some of the more speculative corners — that doesn’t mean it’s a one-way street from here.
We’re watching the Large-cap Growth vs Value ratio, and we’re back at a critical level of interest — the 161.8% extension.
This is the third test, and every time before, it’s been rejected. This zone has consistently acted like a brick wall.
It’s the most logical place for this decade-plus uptrend to pause.
At the same time, some of the major averages are starting to look stretched, with tech doing most of the heavy lifting.
If we start to see rotation out of Growth, that could trigger some consolidation in the indexes — while Value catches up.
We’re already seeing signs of life in Energy.
If Growth cools off, that might be where the money goes next.
