06/03/2018 – quick update to the XLP/NYA ratio. Still waiting for a BULLISH SRC to signal a ‘institutional shift’ to risk off assets in the form of staples and this ratio finding support (XLP / NYA) and starting to rise. While we did get a BULLISH MONTHLY HAMMER CANDLE in May we still have lower targets so need to keep the ‘bullish mindset’ for now. Now, that being said, I added an RSI to the picture to get a feel for where we are …
1/ we are at the lowest levels seen since the 2007 financial crisis. yes, that’s true BUT take a closer look and you’ll find the ratio kept going down for 4 more years.
let’s don’t get complacent but, per my last post w/ the XLK/XLP let’s be aware of BIG TARGETS BEING HIT across the circle of life (bonds, commodities, currencies, GLOBAL equities) to see the pivot.
Eurozone is quite the mess right now … where can they go? Well, the US stock market doesn’t seem like a bad place now does it?
I’ll keep watching, closely, but this XLP / NYA ratio certainly appears to want to seek out the lower targets so that’s not bearish, for now.
if you’ve been following me for a while, you know I enjoy using advanced pattern recognition to ratio analysis.
for a bunch of XLP/NYSE Index analysis click here: https://bartscharts.com//?s=xlp+%2F+%24nya also here for @seeitmarket: https://www.seeitmarket.com/market-update-consumer-staples-xlp-nyse-composite-ratio-17676/
now, this most recent multi- week stock correction was ‘expected’ based on a zone of support coming in for the ratio. (see above link to read)
that being said, we did rally and now, of late, we have really started to sell off.
this means that institutional ‘mindset’ is showing ‘risk off’ or bullish market momentum.
this ratio has picked the ‘exact’ weekly/monthly pivots since it’s inception and the tops/bottoms of 2000, 2002, 2007, 2009, etc.
I trust it … it’s falling out of the sky is telling me that, while some selling pressure might still be present, the BIG BOYS haven’t sought cover … (when the crap is hitting the fan they seek staples) so while this ratio appears to being LIQUIDATED the big boys aren’t ducking and running for cover yet.
THESIS: consolidation/correction to occur or maybe even rally BUT we are going to see the RATIO keep falling, especially if we close below and fly thru the 7 years support zone …
sorry folks, no massive sky is falling or this is it from me … until this ratio finds BIG support and takes off like a rocket I need to remain on the bullish side of the fence … for now. Just calling it like I see it. Honestly, DID NOT expect such a BIG sell off in the ratio. But, guess what, that’s what its doing …
let me know if you have any questions …
PS – note the CYCLE (basic) time rolls into sometimes this month of April. And, we are in April so stand buy …