Overtime

Value ETFs

Please note, Stock Trends will be released tomorrow, one day early, as I am traveling ahead of the long weekend.

Good morning,

Last week, we looked at growth ETFs, so this week we’re covering value. As we saw in yesterday’s Playbook, value may not be keeping up with large growth YTD, but it’s up a respectable 6.4% and higher 8 of the past 9 weeks.

Does it have a chance to outperform? As always, the answer can often be found by doing the work and diving deeper than the growth:value ratio chart.

This week we’ll look at:

• Major value indexes

• Value-leaning sectors

• and industry-focused funds

---

Indexes

IWD: iShares Russell 1000 Value ETF

IWD has decisively broken out to new highs and (like the S&P 500) is riding its 21-DMA. While it has managed to slightly outperform over the past 6 weeks, with the relative chart below a downward-sloping 200-DMA, we need to be highly skeptical of its ability to outperform. $171 is first support.

RPV: Invesco S&P 500 Pure Value ETF

The S&P 500 “Pure Value” ETF is designed to only hold the stocks in the index that are the most “deep value” and then weighted according to which of those exhibit the strongest value characteristics. Even though the last 6 weeks have been especially favorable, RPV has only managed to keep up with the index. Support at $83 but I’d rather own IWD.

---

Sectors

XLF: Financials

Financials made their first all-time high since the 2022 bear market began last week, but are slipping back below those highs in the past few days. I would view any weakness as a chance to get long a sector that has been quietly outperforming since June.

XLE: Energy

We showed how this is the most bullish time of the year for energy relative to the S&P 500 yesterday, and both XLE and RSPG (the equal-weight sector) are knocking on the door of huge breakouts. The relative chart isn’t super strong, but energy has enough beta that if it is working in absolute terms, it is usually outperforming. That’s been the case so far, as only communication services has been better YTD.

XLI: Industrials