Under uncertain yet seemingly improving economic conditions, the S&P 500 Index((IVV)) has staggered for much of the year, gaining just over 3% during this low-volume, stagnant 5-month period. It remains above support at the 50-day moving average, and is poised to make new all-time highs this week. The markets feel very tired though. We might be in the midst of a turning point in the markets, so proceed with caution. The index is up 3.64% in since the beginning of the year.

The S&P 500 Value Index ((IVE)), which consists primarily of US large-cap value stocks in the financial services, industrial, and consumer cyclical industries, tend to have lower price to earnings ratios and higher dividend yields than the market as a whole. This index is just below its all-time high set two weeks ago. Over the past two months, the value index has been outperforming the S&P 500, returning 3.63% YTD while also staying comfortably above its 50-day MA. Notice that the value index never broke support during last month’s downdraft and subsequent bounceback.

The S&P 500 Growth Index ((IVW)), which consists primarily of US large-cap growth stocks in the tech, healthcare, and energy industries, tend to have higher earnings growth rates, higher earnings multiples, and little or no dividend yields. The index is slightly behind pace set by the S&P 500, returning 3.61% YTD.

In the past three months, a short-term trend of value stocks outperforming growth stocks has emerged.

The MSCI EAFE Index ((EFA)), a global developed market index that encompasses Europe, Australasia, and the Far East, has underperformed versus the S&P 500 but doesn’t look as tired as the US index, and given the current state of the US dollar, it looks likely to outperform in the future. The index is above support at the 68 level and remains above its 50-day MA. It is up 2.42% YTD.

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The MSCI EAFE Value Index ((EFV)), which consists primarily of low P/E international large-cap value stocks in the financials, energy, and communications industries, is also strengthening of late. Like the US markets, international value stocks are outperforming growth stocks of late, and the trend seems to be strengthening. The index is up 3.65% since the beginning of the year.

The MSCI EAFE Growth Index ((EFG)), which consists primarily of high-growth international large-cap growth stocks in the industrial, healthcare, and consumer cyclical industries, has underperformed in the short-term compared to the value index. The index is up 0.76% YTD.