S&P500 Value Index: defensive position with upside potential

S&P500 Value Index (which can be traded as IVE.US) is an index of large-cap value stocks in more defensive sectors, which have low P/FCF and P/B ratios. In the case of IVE.US we see both  a defensive position and significant upside potential.

As Bloomberg's calculations show, the Value strategy is significantly more profitable in the long-term than other strategies:

Strategies are ordered by their YTD performance. In the long-term, the Value strategy delivers an impressive 138% return. The next most profitable strategy focuses on Profitability, followed by Volatility and Momentum.

One of the characteristics of the present bull market has been the outperformance of growth stocks and the under performance of value stocks. This is especially evident after the February sell-off. As the chart from Bloomberg demonstrates, the ratio between value and growth has reached the lows from the top of the dot-com bubble.

Technical picture: IVE.US (iShares S&P500 Value Index ETF)

Daily chart

The index has penetrated the rounding bottom formation after the February sell-off (marked with the orange horizontal line). This level is also the 61,8% resistance level: we expect it will now serve as a support for the market. This makes long positions attractive. The divergence of the DeMarker, however, means that the market should be approached with caution.

Entry: 116

S/L: 114,33

These are the index' exposures and its basic fundamentals:

Source: Bloomberg Finance L.P.

Charts: Used with permission of Bloomberg Finance L.P.

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