The market environment was already rattled by wide-reaching tariffs and escalating trade tensions. Now President Donald Trump is turning up the volume on calls for Fed Chair Powell’s termination and the whole concept of Federal Reserve autonomy leaving investors very unsure of how to move forward. With Fed Fund futures markets showing the Fed is not likely to act until the June meeting, we have Q1 earnings to focus on. A lot of attention is going to be focused on the capex figures from technology companies and particularly the hyperscalers. We can’t know ahead of time how markets might react to earnings, but what we can do is build a game plan. The way I think about my investing game plan is to formulate two conditional formulas. “If A happens then I’ll do B, if C happens then I’ll do D” In uncertain times like this it’s a helpful exercise to clear your mind of what you think will and should happen , and look at what IS actually happening . To see what is happening I want to focus on the relationship between growth and value stocks using a ratio of Vanguard’s growth ETF VUG and the value ETF VTV . In the monthly chart below we’re looking at a ratio of VGV/VTV. If the chart is moving higher growth stocks are out performing value stocks, and vice versa in the case of a downtrend. To help illustrate this graphic I included the top-10 weightings for each ETF. We see on this monthly chart that the VUG/VTV ratio broke above the 180 Jan ’21 high in early 2024. The 180 level tried to act as resistance in late ’23 / early ’24, but was ultimately defeated and is not acting as support. We tested the newly formed support level in August 2024 forming a sharp reversal candlestick. We’re now testing this level again with just 1 week left in the April monthly candle. And further gains this week in growth relative to value and we’ll likely trace a similar reversal candle stick to August ’24. Moving down to the weekly chart we get a closer look at this key 170/180 pivot zone. Three weeks ago this support zone was almost broken, but buyers successfully defended this zone sending the ratio up to around 210. We’re testing a bit lower in the past week and now I think it may be in Q1 earnings’ hands to decide the fate of growth stock / value stock ratio. If we break above the red dotted downtrend resistance at around 200 I will consider the pivot support zone successfully defended and I will add growth stock exposure to our portfolios at Inside Edge Capital. If on the other hand we break down through 170 support, it looks the market will be in a defensive position for multiple months to come and we need to increase our defensive positions. We can’t know what the future holds. Our job as investors is to operate with high EQ, fully assess the now, and build game plans that are quickly implemented based on either of scenarios. -Todd Gordon, Founder of Inside Edge Capital, LLC Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited! DISCLOSURES: Gordon does not own VUG or VTV in his wealth management company Inside Edge Capital, LLC. Charts shown are MotiveWave All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
