Bullish Breadth Thrust In Value Stocks

JC Parets
May 8, 2021

The story of Value stocks continuing to be the leaders is something we absolutely cannot ignore.

But have you noticed? Many investors are ignoring it, particularly in the United States. "I'm a Growth Investor", is what they tell me lol. What even is that?

You can really see this rotation taking place in the ratio between the Nasdaq100 and the NYSE Composite:

Remember, over half the top 100 components in the NYSE Composite are NOT even American companies. They're foreign ADRs. You're going to get a lot more value outside of the United States, which is obviously really Growth heavy.

Keep in mind, over 80% of the Nasdaq100 is Technology, Communications and Consumer Discretionary, with Tech leading the way representing 44% of the entire Index.

In the Nasdaq100, you'll find 0.00% Energy, 0.00% Materials, 0.00% Real Estate, 2.39% Financials and 2.69% Industrials.

Hence, the underperformance we've seen out of the Nasdaq over the past 8+ months.

Large-cap Growth was down relative to Large-cap value every day this week. That makes it 3 down weeks in a row as the ratio continues to press down near 52-week lows.

The strength has been in Value, which just put in a monster bullish breadth thrust. Remember these are things we tend to see near the beginning of bull market cycles, not near the end of them:

Here's a fun breakdown of all the countries around the world and their exposure to Value vs Growth Sectors.

There are a few surprises, but it's pretty much what you'd think:

When I think Value stocks, it's hard not to include Natural Resources into that conversation right? That's definitely NOT an American thing.

But seems to be almost everywhere else around the world.

I showed this one below to Michael Batnick earlier today and he gave me an A+ for the chart. And you know how he can be a real ball buster, so I'll take it.

This is our in-house Equally-weighted Commodities Index overlaid with the All-Country World Index Ex-U.S.

Notice how they move together. It certainly doesn't look like the Nasdaq, that's for sure.

Our Index is 15% Energy, 24% base metals, 12% precious metals, 15% grains, 24% softs & 9% livestock.

You want to know what's driving stocks overseas?

With a few exceptions, it ain't Tech!

Definitely make sure to check out this week's Commodities Chartbook: DOWNLOAD HERE

One that stands out is Aluminum heading towards those former levels of resistance:

You're also seeing Tin Futures hit former resistance levels.

Base metals overall have been on a heck of a run. Is it time for a pause?

Check out the latest from our Commodities Weekly report which drops every Friday.

Potential Supply Looms Overhead: FRIDAY FUTURES

Let me know what you think!

JC

 

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