Daily Stock Market Articles

Tuesday After Labor Day – DJIA and S&P 500 Down Six Straight

In the last 21 years, only Russell 2000 has registered an average gain of 0.001% on the Tuesday after the long Labor Day weekend. DJIA, S&P 500 and NASDAQ have struggled with negative average performance. DJIA, S&P 500 and Russell 2000 all fell for the last six years on Tuesday. On Wednesday the market’s performance has been varied. DJIA has performed the best (based upon frequency of gains), up 71.4% of the time with an average gain of 0.35%. S&P 500 is weakest, up only 52.4% of the time with an average gain of 0.38%. NASDAQ has a slightly better record up 57.1% of the time on Wednesday with an average gain of 0.40%.

 

Three Reasons Stocks Might Shine in the Usually Weak September
Posted on September 5, 2023

“If you torture numbers enough they will tell you anything.” -Hall of Fame and Yankee great Yogi Berra

After the best start to a new year over the first seven months for the S&P 500 since 1997, stocks finally fell in August, ending a five-month win streak. In the end the S&P 500 was down only 1.8%, but had fallen close to 5% before a late month rally.

This seasonal weakness wasn’t a surprise to us, as we expected stocks to potentially take a bit of a break after the huge rally as we discussed in Stocks Don’t Like August, Now What? The good news is weakness was normal for this time of year. The bad news is the worst month of the year historically is now upon us.

As you might have heard 50,000 times by now, September has historically been the weakest month of them all. Since 1950, it has been down an average of 0.66%. But it doesn’t stop there, as it was also the worst month of the year during a pre-election year, over the past 20 years, and the past 10 years. You can’t ignore this, as we might not be out of the woods just yet, but there are some signs September could be better this year.



Digging into the data a little more closely we found three reasons to think stocks could actually gain in this usually rough month. Of course, as Yogi told us in the quote above, if we torture the data enough it’ll give us what we want to hear. Still, we’d at least say the chances of a huge September drop like last year is quite low.

The first thing that stood out to us is that years that were down big heading into September tended to see some of the worst returns. For example, last year’s 9.3% drop in September after stocks were already down 17% for the year through August. In fact, the last five times the S&P 500 was down at least 10% heading into September going back 50 years, the month saw absolutely massive drops.



The good news is stocks are on firm footing this year, likely mitigating the risk of a banana peel month for the bulls. In fact, when stocks were up more than 10% heading into September, but on the heels of a red August, September has been higher 8 out of 10 times with some great returns, while the rest of the year has never been lower, up 9.0% on average from September through December.



The second reason we think September could be better than expected is we found that when stocks gained more than 15% after the first seven months and then fell in August (like ’23) the chances of a strong September were quite high, with stocks higher eight out of nine times with some very solid returns. Even better news is stocks have never been lower the rest of the year (from September through December) with an average gain of more than 11%. Another 11% from here would put us at new all-time highs for the first time since January 3, 2022, something we think is still quite possible.



The last reason to think stocks could have a better-than-expected September is looking way back at what happened in January. We noted back then that a strong January usually meant a strong full year, and that has played out quite well so far, but it also could be a clue that September and the rest of the year could be strong. When you have a 5% gain or more for stocks in January, along with an August drop (like ’23) we found September was higher six out of eight times with some nice gains, while the rest of the year was higher all eight times and up 9.4% on average.



Despite a clouded history, the odds of a huge drop in September like we saw last year are quite low. We could still see some seasonal choppiness of course, but the odds favor the potential for some green this September as well.

 

September Opens Typically Weak and Closes Weaker

Although the month used to open strong, S&P 500 has declined nine times in the last fifteen years on the first trading day. With fund managers tending to sell underperforming positions ahead of the end of the third quarter there have been some nasty selloffs near month-end over the years.

Recent substantial declines occurred following the terrorist attacks in 2001 (DJIA: –11.1%), 2002 (DJIA –12.4%), the collapse of Lehman Brothers in 2008 (DJIA: –6.0%), U.S. debt ceiling debacle in 2011 (DJIA –6.0%) and in 2022 (DJIA –8.8%).

Do not anticipate any major selloff and expect new highs around yearend. But expect some sort of surprise to send stocks into another mild correction before the Q4 rally ensues. Nobody wants to talk about it or hear about it, but inflation appears to be done cooling. Further hints at higher inflation will likely heat up the “higher-for-longer” chatter and weigh on stocks.

Concerned that we are poised for a September surprise in the financial sector. Would not be shocked if one of the rating agencies comes and announces a host of bank downgrades, perhaps starting at the top with a big bank. They did warn us back in March during the banking scare and most recently with the Fitch downgrade of the US credit rating.

Either way, expect any weakness to be temporary and for the market to continue to track the seasonal and 4-year cycle patterns illustrated in these charts as it has all year and since 2021.

 

2% Moves Are Back
Wed, Sep 6, 2023

As we noted in a tweet this morning, price action of US equities has been flipped from Tuesday with large caps suffering larger losses than small caps. Looking at yesterday, the decline in the Russell 2,000 (-2.1%) dwarfed the S&P 500's (-0.4%). For the small cap Russell 2,000, that marked the first daily move of at least 2% (positive or negative) since June 5th when the index rallied 2.4%. As shown below, that three month stretch without a daily move of 2% is far from the longest on record, but it does stand out as one of the largest in some time. Running for 61 trading days, it was the longest since the 133 day streak ending on 10/9/18.



As previously mentioned, today's price action is a bit of the reverse of Tuesday, however, the S&P 500 is far from a 2% drop of its own. In fact, the S&P 500 has been on an even longer streak without a 2% daily move. At 136 trading days, the current streak ranks as the longest since February 2018 (310 days). As with the Russell, the current streak would have a long way to go to reach records that lasted for years like from 2003 to 2006. Regardless, the fact of the matter is that day to day volatility by this measure has been extremely muted of late.

 

The 20 Most Loved Stocks by Wall Street Analysts
Wed, Sep 6, 2023

In the large-cap Russell 1,000, there are more than 18,800 individual analyst ratings, meaning the average stock in the roughly 1,000 member index has more than 18 analyst recommendations. It's widely known that there are way more "buy" ratings than "sell" or "hold" ratings, but to put a number to it, right now 54.5% of all analyst ratings in the Russell 1,000 are "buy" ratings. (A "buy" rating includes terms like "outperform" or "overweight" that some firms prefer to use.)

Today we wanted to provide you with a list of the current stocks in the Russell 1,000 that have the highest percentage of "buy" ratings. These could be considered the most loved stocks by Wall Street analysts. (To be included on the list below, the stock needed to have at least five analyst ratings.)

Starting at the top, there are nine stocks that have 100% buy ratings, and the name with the most number of buys is Alexandria Real Estate (ARE) at eleven. WillScot Mobile (WSC), Royalty Pharma (RPRX), Liberty Media Sirius XM (LSXMA), Kirby (KEX), Curtiss-Wright (CW), Churchill Downs (CHDN), Service Corp (SCI), and Howard Hughes (HHH) are the eight other stocks with 100% buy ratings. The remaining eleven stocks shown have at least 93% buy ratings, and the most notable are two mega-caps with $1+ trillion market caps: Amazon (AMZN) and NVIDIA (NVDA). At the moment, 61 of 64 analyst ratings for Amazon (AMZN) are buys, while 59 of 63 ratings for NVIDIA (NVDA) are buys.

NVIDIA (NVDA) has already surged 232% in 2023, so it's pretty remarkable that analysts are still this bullish on the name. It may be hard to believe, but the average analyst price target for NVDA has moved up to $638/share. NVDA's current share price is 26.6% below that price target. The average stock in the Russell is only 14% below its consensus price target, so analysts expect more gains for NVDA than they do for the average name in the index.

Remember, from a contrarian's perspective, a stock with an extremely high percentage of buy ratings may be a name to avoid. After all, once you get to 100%, there's no more room for analysts to get more bullish!

 

Claims Notch New Lows
Thu, Sep 7, 2023

The latest update of jobless claims was broadly positive with both initial and continuing claims moving lower by more than expected. Although initial claims were revised up by 1K to 229K last week, this week's reading fell down to 216K. That means claims have broken down out of the past several months range, notching the lowest levels since the end of January.



Before seasonal adjustment, claims are even more impressively low at 190K. That marks the third week in a row below 200K, however, that is still above the comparable readings for the same weeks of the year in 2018, 2019, and 2022. Additionally, as we show in the second chart below, the current week of the year has historically been the one to see claims put in their annual low meaning from a seasonal perspective, claims will face headwinds from here on out.



Switching over to seasonally adjusted continuing claims, like initial claims the latest reading is back down to the low end of the recent range. Claims have been fluctuating around 1.7 million over the past couple of months, but at 1.679 million this week, continuing claims are tied with the week of July 15th for the lowest reading since January 21st.

 

Housing Prices Back on the Rise
Thu, Sep 7, 2023

In last night's Closer, we discussed a couple of recent releases of alternative housing data sets including the latest delinquency data from Black Knight and housing inventory numbers from Realtor.com. Zeroing on the latter, Realtor.com's August inventory data showed only 585K active listings nationally after seasonal adjustment. Inventories have been drawn upon for seven months in a row, resulting in the lowest level since June 2022. On the bright side, August did also see a seasonally unusual uptick in new listings, but that only puts a small dent in what are historically low inventories.



Using state level data aggregated by region, the multi-month drawdown in inventories has been observed throughout the country. The South has tended to have the highest quantity of homes on the market while the opposite applies to the Northeast. In fact, whereas other regions have generally seen inventories rise off of their lowest levels reached in late 2021, the Northeast is only slightly above its series low.



Similar to aggregate inventory levels, median days on market are well off their record lows early last year but have begun to roll over. Currently, median days on market is at 53 days, which is well below the pre-pandemic range.



Given the continued low supply, prices have swung higher with median prices at the highest level since last July both in terms of total price and price per square foot. Rising at a high single digit month over month annualized pace, August also saw the most rapid appreciation since June of last year.



Breaking down home prices by geography, the West has the highest median home price in the country, but those prices have been relatively stagnant since early 2022. The Northeast, on the other hand, has consistently had the second highest prices in the country and prices have been steadily rising. In fact, prior to seasonal adjustment, prices in the Northeast have risen 11% YoY compared to the next highest of 8.8% YoY in the Midwest and low single digit growth in the South and West. For more in-depth coverage of housing and the economy, make sure to subscribe to our Closer feed.

 

Bulls Bounce as S&P Stumbles
Thu, Sep 7, 2023

Although the S&P 500 has dropped in the past week, sentiment has surged with the latest survey from the American Association of Individual Investors (AAII) showing 42.2% of respondents reporting as bullish. That is up 9.1 percentage points from the previous week. While not large enough to earn any long standing superlatives, it marks the largest one week jump in bullish sentiment since July 20th when it increased 10.4 percentage points and indicates a significant increase in bullish sentiment.



Bearish sentiment in turn was lower at 29.6%. However, the weekly decline was much smaller at only 4.9 percentage points. Although the jump in bullish sentiment did not borrow heavily from bears, the 4.9 percentage point drop was the largest one week decline since early June.



Additionally, the drop in bearish sentiment was enough to lift the bull-bear spread back into positive territory. That follows two straight weeks of negative readings. While not as elevated as the late spring and early summer, at these levels, the bull-bear spread is indicating more bullish sentiment than has been observed for much of the past year and a half.



Using the latest AAII data in combination with the findings from the sentiment surveys from Investors Intelligence and the NAAIM Exposure Index, our weekly sentiment composite indicates that investors hold slightly more optimism than has been the historical norm as the index is slightly positive. That compares to negative readings the prior two weeks and extremely bullish readings as recently as the second half of July.

In last night's Closer, we included a look at this composite with the addition of another sentiment indicator: the TD Ameritrade Investor Movement Index.

 

September Quarterly Options Expiration Treacherous, Week After Awful

Since the S&P index futures began trading on April 21, 1982, stock options, index options as well as index futures all expire at the same time four times each year. Some call it Quadruple Witching or Quad Witch due to single-stock and ETF futures however, their impact on the market appears subdued to us and we continue to prefer using Triple Witching.

September’s quarterly option expiration week has been up 56.1% of the time for S&P 500 since 1982. DJIA and NASDAQ have slightly weaker track records with gains 51.2% of the time and 53.7% of the time respectively.

However, the week has suffered several sizable losses. The worst loss followed the September 11 terrorist attacks in 2001. In the last twenty years, S&P 500 and NASDAQ are tied for best record during September’s quarterly option expiration week, up thirteen times, but NASDAQ has been down the last five straight. Friday had been firm with all three indices advancing every year 2004 to 2011, but S&P 500 has been down ten of the last eleven since.

S&P 500 Down 26 of 33 Week After September Quarterly Options Expiration, Average Loss 1.01%

The week after September options expiration week, has a dreadful history of declines most notably since 1990. The week after September quarterly options expiration week has been a nearly constant source of pain with only a few meaningful exceptions over the past 33 years. Substantial and across the board gains have occurred just four times: 1998, 2001, 2010 and 2016 while many more weeks were hit with sizable losses. Last year DJIA and S&P 500 declined over 4% while NASDAQ fell 5.07%.

Full stats are the sea-of-red in the tables here. Average losses since 1990 are even worse; DJIA –1.07%, S&P 500 –1.01%, NASDAQ –0.98%. End-of-Q3 portfolio restructuring is the most likely explanation for this trend as managers trim summer holdings and position for the fourth quarter.

 

High Rates Dampen Expansion Expectations
Tue, Sep 12, 2023

Early this morning, the NFIB published their latest read on small business sentiment. The headline index fell to 91.3, 0.2 points lower than expectations. Sentiment continues to sit near some of the lowest levels of the past decade, albeit off of the worst post-pandemic period when it had reached a low of 89.0 this past spring.



With the decline in the headline index, it is just shy of the bottom decile of its historical range reinforcing the point that small businesses are historically pessimistic. Breadth in this month's report was fairly mixed with five inputs to the composite falling month over month, three rising, and two going unchanged. As for the other indices, five rose and the remaining three fell.



Employment metrics are some of the areas that have remained somewhat elevated versus history. For example, while many categories are in their bottom deciles of historical readings, job openings hard to fill, compensation, and compensation plans all rank in the 93rd percentile or better. Even plans to increase to increase employment have held up in the top quartile of its historical range. Although current readings would indicate a healthy labor market, conditions have not necessarily improved. As shown below, most of these categories have been trending lower for some time meaning small business labor markets have cooled. However, compensation plans spiked by 5 points in August which is tied for the fifth largest month over month jump on record.



Expectations for changes to sales remain in negative territory meaning that on net more small businesses expect their sales to fall than rise. In August, that reading worsened, and at -14, the index is in the bottom 3% of all readings on record. As with the headline number, although that is a disappointing result, it is off of recent lows. Conversely, actual sales changes are hitting more new lows with the weakest readings since the spring of 2020 and late 2012 before that.



The share of respondents reporting now as a good time to expand their business is another category where readings are at the low end of their historical range without any improvement or further deterioration in August. The NFIB provides a breakdown into the reasons responding firms report their expansion outlook. As shown below, the vast majority report poor economic conditions as the reason which checks out when compared to a very low reading on expectations for the economy to improve. Behind economic conditions, interest rates are the next most quoted reason. That lends to some evidence that the Fed's rate hikes are working as intended.

 

Sell Rosh Hashanah Buy Yom Kippur Sets Up

Sell Rosh Hashanah, Buy Yom Kippur is aligning quite well this year with late September seasonal weakness and the notoriously treacherous week after quarterly options expiration, AKA Triple Witching. It’s a few days before FOMC with a market jittery on hotter inflation data.

Rosh Hashanah lands on Saturday 9/16 this year so our stats us the close the day before. This is right at the mid-month peak of the typical September pattern. Yom Kippur falls on 9/25 which is the 16th trading day of the month, right around the seasonal monthly low point.

The thesis is that folks sell positions on Rosh Hashanah the first of the Days of Awe to rid themselves of financial commitments and then return to the market after Yom Kippur, the Day of Atonement. It is no coincidence that this coincides with the seasonal September/October weakness.

The market has been tracking the 4-year cycle and seasonal trends to a T this year and the past 3. So this should make a great entry for the Q4 pre-election year rally.

 

CPI Gains Come and Go
Thu, Sep 14, 2023

The S&P 500 managed to rise 0.12% on Wednesday in the wake of the CPI release. That is the fifth month in a row in which the S&P 500 rose in response to a CPI print, and only two months over the past year (February and April) have seen negative reactions. Although the S&P has consistently risen on CPI days, the size of the moves have been less substantial than they were previously. As shown below, taking a rolling 10-day average of the S&P 500's daily change on days that CPI is published shows the average performance remains positive but has turned lower versus a couple months ago when the average move was above 1.2%, which was some of the strongest reactions in a decade and a half.



Although S&P 500 performance has been positive on the day of CPI releases over the last year, looking one week out, the results have been less positive. As shown below, the S&P has consistently fallen in the week after CPI releases. Again taking a rolling 10-day average, one week performance has been negative for 20 months in a row, or every month since the start of 2022.

 

Bulls Slump While The Put/Call Ratio Surges
Thu, Sep 14, 2023

The S&P 500 has managed to rise 1.15% in the past week, but sentiment has barely reflected the positive tone. After climbing to 42.2% last week, AAII bullish sentiment dropped right back down to 34.4% this week. That is the largest one week drop in a month although it doesn't leave bullish sentiment at any sort of new low.



The bulls didn't move to the bearish camp, however. In fact, bearish sentiment fell to 29.2%, which is the lowest reading since the week of August 10.



Because the declines in bullish sentiment outpaced the drop in bears, the spread between the two dropped to +5.2.



Given both bulls and bears dropped, neutral sentiment picked up the difference. As shown below, neutral sentiment rose to 36.4% this week, which was the highest reading since the week of May 18th when it was slightly higher at 37.4%.



While the AAII sentiment survey did not see any sort of particularly noteworthy moves this week, the equity put/call ratio did notch a new high yesterday. As shown below, over the past couple of months, the ratio has begun to turn higher with yesterday seeing the highest reading since March 10th. At 1.35, that ratio also measures in the top 1% of all readings since 1995. Remember, a reading above 1 means there are more put buyers (negative bets) than call buyers (positive bets).

 

Continuing Claims Flatten Out
Thu, Sep 14, 2023

As was expected this week, jobless claims data deteriorated with seasonally adjusted claims rising to 220K from 216K. However, that was better than expectations which were calling for claims to rise by another 5K up to 225K. As shown below, claims continue to sit at the low end of the past several months range, indicating a still healthy labor market.



At the moment, claims prior to seasonal adjustment are at an interesting point of the year. Unadjusted claims totaled 174.5K this week. That is only a couple thousand claims higher than last year and near the slightly lower readings from 2018 and 2019. Overall, those remain some of the strongest readings on record when comparing the like weeks of the year. Additionally, we would note that claims are likely at or near their seasonal low. Historically, the current week of the year has been the annual low a quarter of the time (that being the case in 2018 and 2019) whereas the following week has marked the low another 35.7% of the time. In other words, as we have frequently mentioned in recent weeks, seasonal tailwinds will begin to shift to headwinds in the coming weeks.



Seasonally adjusted continuing claims likewise came in below expectations this week, rising to 1.688 million compared to forecasts of 1.69 million. Again like initial claims, continuing claims are far from worrisome as they sit at historically strong levels, however, the past few months downtrend in claims has begun to bottom out as it has been eight weeks since the last near term low.

 

Mid-September Seasonal Market Peak

With the Fed on the sidelines, end-of-quarter portfolio rebalancing and quarterly options expiration are likely to be the key forces driving the market. As of the 9/14/23 close, DJIA is up 0.53% this September. S&P 500, NASDAQ, Russell 1000, and Russell 2000 are all still in the red. Except for DJIA, performance this September has been below average. This potentially does not bode well for the second half of September.

Over the last 21 years, the market has tended to peak on or around the 11th trading day of September (September 18 this year). The average decline from mid-month through the end of the month has been around 2%. We maintain our restrained outlook for the remainder of September and into October. Inflation’s cooling trend is being challenged by rising energy prices and geopolitical concerns are numerous.

 

Large Decline in Homebuilder Sentiment
Mon, Sep 18, 2023

For a second month in a row, homebuilder sentiment slumped with the NAHB's Housing Market Index falling from its recent high of 56 in June down to 45 in August. That is the lowest reading since April and the first back-to-back declines since last December.



As shown below, double-digit drops in two month spans are far from unprecedented, but the most recent one is in the bottom 2% of all two-month moves since the start of the survey in 1985.



The declines in homebuilder sentiment were observed across the country with the indices of each of the four regions of the country falling. The charts are largely similar with each having come off of recent highs well below the prior peaks but still well off the lows put in place late last year.



As homebuilder sentiment has peaked, so too have homebuilder stocks. This group was a big winner in the first half of the year, but so far in Q3, the iShares Home Construction ETF (ITB) has made a series of lower highs and lower lows. In the process, it has fallen back below its 50-DMA and continues to trade below that level near its summer lows.



Again, relative to the broader market, ITB was a consistent winner throughout much of 2022 and the first half of 2023. But with weaker performance over the past few months, that outperformance relative to the broader market (indicated by the upward trending relative strength line below) has been put to the test.

 

The Dirty Dozen
Mon, Sep 18, 2023

The later part of September has historically been one of the weakest periods of the year for the S&P 500, and last year was especially painful. The chart below shows the percentage of S&P 500 stocks that posted positive returns from the close on 9/18 through the end of September over the last ten years. Since 2013, there have only been two years where more than half of the index's components managed to eke out a gain during this period. The average over the last ten years was just 36% which is a pretty low number when you think about it. Even that looks good, though, when you look last year when just 2% of stocks in the S&P 500 managed to rally during the last twelve days of September!



The table below lists the seventeen S&P 500 stocks that have traded down from the close on 9/18 through month end at least nine out of ten times over the last ten years. Of those seventeen stocks, four - Viatris (VTRS), Sealed Air (SEE), Simon Property (SPG), and Johnson & Johnson (JNJ) have traded lower during this period in each of the last ten years. That being said, the range of declines varies widely from a median decline of 5.89% for VTRS to less than 1% for JNJ. Besides those four stocks another 13 stocks in the S&P 500 have traded lower during this period in nine of the last ten years, including names like Freeport-McMoRan (FCX), Discover (DFS), and CVS Health (CVS).



Some stocks have managed to buck the late September blues, though. O'Reilly Automotive (ORLY) was one of the few stocks to rally between 9/18 and the end of September last year, and it's traded higher during this period in eight of the last ten years for a median gain of 1.73%. ORLY is the only stock to trade higher during this period in eight of the last ten years, but Automatic Data Processing (ADP), WR Berkley (WRB), and Tyler Technology (TYL) have traded higher 70% of the time, and just seventeen other stocks have traded up at least half of the time. Some of the more well-known names in this cohort include, Domino's (DPZ), Chipotle (CMG), Cisco (CSCO), and IBM. Unless you've been heavily exposed to these stocks in the later part of September over the last ten years, you're probably counting the minutes until October!

 

Housing Starts and Building Permits Go Separate Ways
Tue, Sep 19, 2023

Building Permits and Housing Starts are always reported on the same day, but today's report for the month of August was one of the more bizarre ones we've seen in some time. While Building Permits topped consensus forecasts by 100K (1.54 million vs 1.44 million), Housing Starts had a big miss coming in at just 1.28 million versus forecasts for a pace of 1.44 million. In the case of Starts, it was the biggest miss relative to expectations since February 2019 and the weakest monthly print since June 2020. In terms of the divergent results relative to expectations, going back to at least 2002, it was the first time that either Building Permits or Housing Starts missed expectations by at least 100K while the other beat forecasts by at least 100K.

As shown in the table below, all of the strength and weakness in this month's report was due to fluctuations in multi-family units. While multi-family starts were down 26% m/m, multi-family permits were up 16% m/m. Single-family units, meanwhile, were much more restrained with starts down just 4% while permits were up 2%. Thus, what looked like a very volatile report at the surface was more grounded below the surface.



Looking at Housing Starts on a 12-month average basis shows that activity has slowed sharply over the last year. At an average of 1.41 million over the last twelve months, total Housing Starts were the lowest in August since February 2021.



Again, while overall starts and permits have been driven by swings in multi-family units, both single-family permits and starts have actually started to stabilize and turn higher over the last two months. If that trend can continue in the months ahead, it would be a positive shift in the trend.

 

Dividends (DVY) Get Payback on Growth (VUG)
Tue, Sep 19, 2023

Checking in on our Trend Analyzer tool, the clear biggest losers over the past week have been growth stocks. As shown in the snapshot below, almost all of the growth ETFs regardless of market cap have fallen over 1% in the past week. Although these are the same groups that have posted some of the biggest gains on a year to date basis, that recent drop has brought them back below their 50-DMAs with some like the Russell Mid-Cap Growth ETF (IWP) and small-cap Russell 2,000 Growth ETF (IWO) falling into oversold territory.

On the other end of the spectrum, there are only a small handful of ETFs in this screen that have risen over the past five days. The strongest of those has been the Select Dividend ETF (DVY) with a nearly 1% gain in the past week. That has cut into modest year to date declines (few other ETFs in this screen are also down year to date, but those are also dividend or low volatility focuses). In other words, price action over the past week has to some degree been a rotation of year to date performance.



In the charts below, we show the ratio of the Dividend ETF (DVY) versus the Growth ETF (VUG). The ratio has been in a steep downtrend throughout 2023 meaning growth has trumped dividend payers. However, this month's reversal of that outperformance has resulted in the ratio to break out of that downtrend. Zooming out, that rebound in the ratio has also coincided with an uptrend line off of late 2020 and 2021 lows. Time will tell how lasting this reversal in relative performance will be, but from a purely technical standpoint, it has come at a logical point.