Two important guides to the internals and leadership within the US stock market are intact to the bull case, despite the recent and continued weakening of Semiconductor index leadership. Semi had been a strong leader since October, 2022, but has broken down of late. A cyclical warning.
However, two more internal indications continue to flash bullish. Growth stocks have maintained an uptrend in relation to Value stocks after bending but not breaking during the July-August market correction. Post-election, the ratio is sitting atop its uptrending moving averages.
The XLV/SPY ratio, one of our main indicators for a future bear market is just bombed out. The defensive sector vs. the broad market would bottom and turn up to signal caution. As it is, in its extreme state a measure of caution is already warranted. But as with so many risk indicators, there is no trigger yet. Risk is fully “on” in the US market.
My holding in the Cloud ETF is a holding in growth stocks. CLOU is hitting the 23 target today and filling the gap as projected in the Oct. 28 NFTRH+ update.
But it is a wider growth story, per the resurgent Cathie Wood’s ARKK fund.
Growth stocks are already getting overbought. At least CLOU and ARKK are. But the indication is that Growth has partied harder than Value, post-election. Trump is perceived as good for these stocks. I don’t want to read too much more into it at this time. But it is an interesting market view, for perspective.
