Overtime

US Equity Style Box Review

Good morning,

This week, we’re reviewing the 9 boxes of the US equity style grid.

Year-to-date, large growth remains firmly in the lead, while the opposite corner, small-cap value is trailing with a 6.7% return.

However, more recently we have seen some reversion to the mean, with large growth the laggard over the trailing three months.

Today’s report will review key levels and trends for all 9 boxes of the grid using the Russell index-based ETFs. We’ll also review relative strength vs. mid-cap value.

Mid-value may not be the most popular asset class, but by comparing it to the asset class at the center of the grid, we’ll gain a better view of relative strength than we would with a large growth-dominated benchmark like the S&P 500 or Russell 3000.

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IWF: Large Cap Growth

Large cap growth is the most important asset class to broader benchmarks but IWF has been weaker since the July peak. Even though the S&P 500 is just 1% from its all-time high, IWF is more than 5%. This ETF needs to get above $372 to avoid making another lower high, while first support comes in at $345. Relative to mid cap blend, large growth is on close watch as it tests the 200-DMA which is beginning to flatten out.

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IWB: Large Cap Blend

IWB looks just like the S&P 500 that we reviewed in yesterday’s Playbook. The asset class heads into tomorrow’s Fed meeting at an obvious inflection point, set to break out or fail depending on what is done and said. Nobody knows what the Fed will do, but looking purely at the chart, we should maintain a bullish outlook.

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IWD: Large Cap Value

The chart of large value stands out for having already eclipsed its July highs and it remains above that level today. IWD is in a strong uptrend in absolute terms and has a bullish trend relative to mid cap blend. First support is last Wednesday’s intraday low ($180.37).

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IWP: Mid Cap Growth