VYM - VYM: Ready To Break Out (Technical Analysis)

2024-07-20 03:37:54 ET

Summary

• VYM prices were largely trapped in a consolidation window between $110 and $120 in the past ~3 years or so.
• Catalysts developed recently are finally pushing it out of this multi-year trading window.
• The top catalysts are the updated probability of interest rate cut(s) and the change in market sentiment.

VYM ETF, interest rates, and market sentiment

My last article on the Vanguard High Dividend Yield ETF ( VYM ) was published about 3 months ago (see the screenshot below). The article was titled " VYM: Inflation Has Improved Its Timeliness " and was published on April 10, 2024, on the Seeking Alpha platform. At that time, the price was $118 and I rated VYM as a buy based on the historical performance of value stocks (like those held in VYM) during periods of elevated inflation. More specifically, I argued that:

Despite the large price rallies recently, the VYM fund is even timelier now in my view. We may be near a cyclical inflection point for value stocks. The development of inflation could even better VYM's odds for outperformance in the years to come.

For further details see: