Chart of the Day - Wednesday, January 5th, 2022

Today’s Chart of the Day was shared in a note by John Roque of 22V Research. It's a ratio chart of the NASDAQ vs. the S&P 500 over the past 24-years. The chart on the bottom is the same ratio, just zoomed in over the past 5-years. The Tech-heavy NASDAQ has dominated the S&P for much of the past two decades. However, just like the Growth/Value chart that we highlighted yesterday, this long-term trend appears to be reversing. As you can see, this ratio is being rejected at resistance from the dot-com bubble highs, while momentum is deteriorating at the same time. John explained, "The NASDAQ vs. S&P Ratio peaked in Feb ’21 and has been distributing, cresting, rolling, and topping since. We continue to think it works lower with NASDAQ underperforming relative to the S&P. Near-term and intermediate-term momentum indicators for this relationship are oversold, but a long-term version is not close to an oversold reading."