The Growth Sector Is Overstretched

So far in 2024, the stock market environment has been one in which the strong get stronger and the weak get weaker. [Jeff Clark's Market Minute]( The Growth Sector Is Overstretched By Jeff Clark, editor, Market Minute So far in 2024, the stock market environment has been one in which the strong get stronger and the weak get weaker. The best-performing stocks have made a consistent series of higher highs. And, the worst performers keep falling to lower lows. The S&P 500 is up 17% so far this year. The Nasdaq 100 is up 24%. The Technology Select Sector ETF (XLK) has gained 22%. The VanEck Semiconductor ETF (SMH) is up an average of more than 50%. Meanwhile, the Russell 2000 (IWM) is just barely positive on the year. The iShares U.S. Transportation ETF (IYT) is flatlining. Recommended Link [Is It Too Late to Buy Nvidia? See Shocking Answer from LegendÂ]( [image]( Are AI stocks in a massive bubble that’s ready to pop? Will this AI boom end in tears, just like the dot-com bust in 2000? Should you buy AI stocks like Nvidia… Or is it too late? [Click here to see the answers from the legendary trader who predicted the rise of AI stocks five years ago.]( -- More New Lows Than Highs… More stocks are hitting new 52-week lows than new highs. And the difference in performance between growth stocks and value stocks has stretched to its highest level since late 2021 – just before the difficult market environment of 2022. Take a look at this chart comparing the S&P 500 growth fund (SPYG) to the S&P 500 value fund (SPYV)… [(Click here to expand image)]( When this chart is moving higher it indicates growth stocks are outperforming value stocks. When the chart is moving lower, value is beating growth. Growth has been firmly in control since the start of 2023. And, the outperformance of growth over value has exploded higher over the past three months. The chart has now gone parabolic. Notice, though, how the momentum indicators at the bottom of the chart have been lagging the recent rally. While the ratio chart has made higher highs, the indicators are making lower highs. This sort of “negative divergence” is often an early warning sign of an impending decline. That means, growth stocks are likely to fall or value stocks are likely to rally, or some combination of the two. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. The Rubber Band In other words, the proverbial rubber band for the growth sector is overstretched to the upside. It’s vulnerable to a decline. And, the value stock rubber band is overstretched to the downside. It’s set up for a rally. The last time we experienced that sort of “snap-back” action in the market was back in 2022. That’s when everyone’s favorite, best-performing stock of 2021 – Tesla (TSLA) – dropped from $400 per share to just over $100. Some of the stocks that lagged the market’s gains in 2021 – like ExxonMobil (XOM) and Archer Daniels Midland (ADM) – gained 90% and 50% respectively as the broad stock market fell in 2022. If we see something similar this time around, then the leading stocks so far in 2024 are likely to struggle through the end of the year, and the lagging stocks are set to play one heck of a game of “catch-up.” Given the parabolic look to the previous chart and given the negative divergence on the various momentum indicators, that game should begin soon. Best regards and good trading, [Signature] Jeff Clark Editor, Market Minute [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2024 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](