Is Growth Relative to Value getting over-done in the stock market?  The trend of growth stock outperformance has definitely dominated 2017.

First lets look at the S&P 500 growth to value ratio.  We see it’s just been a relentless trend all year.  Now the ratio is trying to clear the late 2015 highs.


The Russell 2000 growth index relative to its value counterpart is also testing some pretty solid resistance from last year.

gro val st

This is such a strong resistance that we may start to see value stocks outperform.  This may just be a pause area & few week rotation or it may be something larger.  We don’t really know.

Let’s just assume this is where a turn will take place.

The next question is what groups do we consider value and what stocks are poised to benefit from this?

The groups that come to mind are cyclicals, financials, energy and healthcare.  The cleanest sector charts of those four are financials and healthcare.



The first group that comes to mind is regional banks which are having a nice rally today.  Again, this group has a really nice looking base.


All in all, a rotation into value stocks doesn’t look like a terrible bet here.  If you’re a large asset manager you might want to consider getting more exposure to value sectors.  Individual stock pickers and traders don’t need to adjust much other than going over more charts in the value sector/groups.

Trade em Well