WATCH THE RATIO’s
12/16/2018 – as shown before, the ratio of XLP (Staples) / NASDAQ and the PATTERN that completed gave us fair warning of this correction we find ourselves in .. is it the beginning of the ‘next’ bear market. I have no idea. Is it just the ‘buy the dip’ – I have no idea. I guess if you have 50 years you don’t care but if you have 2 weeks you might. It’s all relative folks but we do want to find what the best entry/exit points are as we look to manage risk. that’s all I’m trying to do …
the big institutions have a risk on or a risk off mindset. we hear it all the time. ratio’s allow you to try and get a best guess of where they are … in this case the STAPLES / NASDAQ has helped – a ton.
so, where are we now?
KEY: note the blue arrows. those are the extreme moves up in ‘risk off’ for the institution and then, as shown, the ratio stalls and then the band plays on … believe it or not, we haven’t reached that extreme yet so I simply expect the correction to continue until the ‘target zone 1’ is reached. If your a bull then this seems a logical place to stick your toe int he water else watch and wait for a MONTHLY SIGNAL REVERSAL CANDLE. Else, we could go all the way up to Target Zone 2.