Chart of the Day - Friday, December 30th, 2022

Today’s Chart of the Day was shared by Scott Brown (@scottcharts). The S&P 500 ended the year down 19.44%, marking its worst year since 2008. In fact, it was 3x worse than any year since 2008. We began the year on a strong note, with the S&P hitting its last & only all-time high on the first trading day of the year, but it was downhill from there. One of the themes that defined 2022 was the rotation out of Growth Stocks and into Value Stocks. The sexy Growth/Tech Stocks got clobbered, while boring old Value Stocks fared much better. It all started at the beginning of the year when this ratio failed at its 2020 highs. The ratio ended the year today near two-year lows, with Growth (IWF) underperforming Value (IWD) by more than 22%. Looking ahead, Scott points out that we could see Growth rebound relative to Value in the near term, with momentum diverging positively. However, this ratio is going to need more than just mean reversion to repair the damage that took place in 2022.