What I Learned This Week

More evidence that value investing’s 12-year underperformance is finally coming to an end. The coming reversion to the mean.

The technical profile of value stocks increasingly suggests that last month’s rebalancing (see WILTW September 12, 2019) was not a temporary phenomenon. As the following charts show, the iShares Edge MSCI USA Value ETF (VLUE, $84.93) is trading near a 52-week high and poised to break out of its resistance area, backed by rising 50 and 200-day moving averages. Meanwhile, VLUE’s R/S versus the S&P 500 appears to be coming off the right side of an inverse head-and-shoulders pattern, which suggests a sustainable period of outperformance could be in the cards. There are several catalysts on the horizon that could propel this rebalancing. Source: StockC…

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