A Key RS Relationship Between Growth and Value
It feels somewhat ironic that through 5/13, Large-Cap Growth representative VUG is up just .01% in 2025. Peak to trough, VUG lost nearly 23% in 2025, clawing its way back to positive for the year as it broke back into a positive trend and returned to a buy signal on its default chart for the first time since late 2024. In the near-term, $425 looks to be quite a stiff point of resistance, having reached that level five times over the last year or so. VTV also presents quite an interesting technical picture. While VTV specifically holds a score below NDW’s 3.0 threshold, the average US Large Cap Value fund is still technically acceptable with a 3.35 fund score on the Asset Class Group Scores Page. VTV posted its first buy signal of the year with the recent rally, returning into a positive trend in the process. All of that said, today’s feature will build off of several interesting developments worth watching favoring risk-on changes as we rocket towards the back half of May.
We will start our conversation with a notable development by looking at a 3.25% RS chart between VUG & VTV. As of action on 5/13/25, this moved back into X’s signaling a near-term preference for growth focused names on the most recent rally. Sitting on a pair of consecutive buy signals, chart action of the 3.25% scale has been largely consistent over the last 30 years- a net positive for trend followers. While further leadership for growth would see VUG challenge all-time highs of “relative price” against VTV, the reversal is certainly a talking point as you enter conversations with clients. Building on that, growth was able to hold its long-term signal against value, another feather in the cap of a fund which has held above NDW’s 3.0 fund score threshold since February of 2023. A hypothetical portfolio which owns whichever fund is on a buy signal vastly outperforms a simple buy & hold strategy of either representative since 1998.
Practical allocations for RS charts don’t stop on a simple asset to asset level (think the previously mentioned switching strategy between VUG & VTV, for example.) The analyst team will quite often use these relationships to gauge what kind of assets are in control. Take for instance the chart below detailing a 6.5% RS chart between Bitcoin ($BTC) & Gold (GLD). While the latter certainly isn’t acting like a particularly defensive asset (at least in 2025) the relationship may help us gauge whether risk on (Bitcoin) or risk off (Gold) options are leading the way. While the RS switching strategy on this scale isn’t as profitable as simply owning Bitcoin throughout the time period (to no surprise…) the overall idea can be used in tandem with other commentary to build out a weight of the evidence across your portfolio.
There have also been a handful of interesting changes on an individual sector perspective worth watching. Starting broadly with Relative Strength changes against NDW’s cash proxy MNYMKT, both communication services representative XLC and financials representative XLF moved back into X’s on their 3.25% relative strength charts. Healthcare (XLV), Utilities (XLU), Staples (XLP) & Energy (XLE) remain in O’s against MNYMKT at the time of this writing. Looking at the core of the market (SPX) vs. individual sectors, SPX moved back into X’s against staples representative XLP on a 3.25% scale, another building block supporting the idea of a more risk-on focused advance as we look to attack all time highs above.
Absolute price movement is certainly important. All that said, using relative strength charts can help remove some of the “fog of war” associated with only looking at said absolute price in a vacuum. Using alerts to keep up with a list of relative strength charts can help automate the process, making best use of your time on the platform.
