Value Stocks Finally Break Out vs Growth Stocks

JC Parets
November 11, 2016

There have been a lot of really amazing moves this week in the market. But one interesting development that I don't hear much chatter about is the monster move in Value stocks vs Growth stocks. Value stocks like Berkshire Hathaway and JP Morgan have exploded higher the past week at the same time that Wells Fargo stopped crashing. Meanwhile, in Growth land Amazon and Facebook have had a tough time. You can see this beautifully in the charts.

This answers the question: Would we rather own Value Stocks or would we rather own Growth Stocks? Here is a a look at the downtrend in Value vs Growth going back a few years:

IWD-IWF

Some might call this pattern a cup and handle or some other fancy name, but what I see is a series of higher lows, higher highs and now a penetration of a downtrend in place for over 3 years. With momentum in a bullish range, this is an uptrend all day which suggests buying value stocks over growth stocks moving forward.

Let's remember that this trend of growth over value had been in place for a long time. From a bigger picture perspective, this trend is now something brand new:

IWD-IWFw

To me it looks like Value over Growth for sure. As long as we're above the downtrend line from the 2007 highs, this is a new trend that we need to respect. 

If you like this type of top/down analysis, sign up here for a 30-day RISK FREE trial and gain access to over 500 charts, the weekly premium letters, monthly conference calls and many other bonus features.

 

 

Tags: $IWF $IWD

Filed Under: