Intraday BUY ratio = sell equities

…using ratio analysis we can support risk on/ risk off strategies. in this case we use the Staples ETF (XLP) versus the NYSE Index

here’s an intraday look at the XLP/NYSE Index ratio … 30 minute chart. a near ‘perfect’ BUY PATTERN.

with a buy pattern, that will signify ‘risk off’ for the big guys and therefore a sell equities.

if (the big if) this pattern fails then the likelihood of a continue advance is high …

XLP/NYA ratio analysis – an update

06/09/2019 – back to our old favorite. you know I’ve been watching this one for a while. I was hawking a low in the ratio in mid-2018 but missed it from a time perspective … then, in retrospect, easily saw the measured move and the .786 retrace. I’m human, I missed it. should have been more diligent – especially w/ the time cycles coming in from the 2007 low. the TIME had worked as support before so why not now …? Oh well.

now, we can pretty nicely see 5 waves up and we are in the 5th wave up .. could be a 1 or an A. only TIME will tell. I feel reasonably certain that after a pullback on the ratio (less volatility, higher stocks) there will be another 5 wave move higher if this analysis is correct.

I’ve also included an overlay of the NYSE Index and the XLP/NYA ratio to show the thesis that – by using patterns to ratio analysis we can find potential inflection points. in this case – staples (XLP) represent a risk off mindset (volatility/selling) when they outperform the overall market (the ratio goes up). when the overall market (NYSE Index) outperforms (the ratio goes down) then risk is on and the market volatility should go down and prices go up. Seems to work …

so, 5 waves up from the bottom, 3 wave pullback and 5 waves up … that’s what were looking for, right now. TIME will tell.

NYSE Index Targets

Well, the support level shown in my last post was defeated on Friday. We also closed ‘below’ old resistance so it looks like ‘polarity’ didn’t work here. All I’m trying to do is find the ‘bounce’ area as cycles suggest into end of January/early Feb.

So, here’s some targets on the NYSE Index that I’ll be targeting over the coming weeks ..

let me know if you have any questions.

Bart

PS – got out in the water today. The swells have been PUMPING of late in SoCal. Good clean living folks, good clean living.

the last time this happened the market corrected 26 percent …

11/9/2017 – as you can see below and on other post we have been hawking the ratio analysis of XLP / NYSE Index. Won’t go into the why here as that has been done a number of times.

some key points to consider:

  • we have completed the EXACT measured move correction and biggest since the 2009 lows.
  • the last time this happened the market corrected 26% – just calling it like I see it.
  • from a timing we are still not in the ZONE so it could shuck and jive here …
  • RSI has hit the lower end of the range BUT note it banged around this level for a while as the market (overall market) kept going higher into 2000.  so, it doesn’t HAVE TO cause a reaction.
  • and, one last, today the market lost some ground right as the ratio was completing the measured move that we’ve been talking about for weeks if not months.  questions?
  • two charts – an update to the ratio and the NYSE Index showing how it delayed for a month once the ratio bottomed and then sold off 26%

keep an eye on this ratio!

NYSE Index showing correction once the ratio bottomed

 

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10/26/2017 – as you know, we were looking for support to hold on a .382 retracement of the XLP/NYA ratio. this support would cause a bounce or a move higher in the ratio and therefore bring volatility into the market.  NOT EVEN CLOSE … that level has been pierced and now lower targets are shown.

folks, if your thinking of shorting I would wait .. when .382’s from all time lows don’t even cause a weekly/monthly move then something bigger is at hand going on …

I did some basic cycle work to show a time zone when the next support could come in December 2017-April 2018.

Until we elect a weekly or monthly signal reversal candle in this key ratio I wouldn’t touch the short side.

Bart

XLP / $NYA … approaching .382 from all time low

if the XLP/NYA ratio finds support and appears to end an A-B-C correction THEN we ‘should’ see Volatility Spike and correspondingly a nice correction in equities. If this level fails, then we might see some consolidation or a little pullback but nothing that could spook the masses.

it might be noted that … right now we are levels of bullishness as measured by market vane that we haven’t seen since ..yes, you got it the 2007 top.

a plunging liquidating sell-off should, ultimately be bought .. as I still don’t think this run is over but I do believe we are long overdue for a nice pullback.  W/ the options expiration and most mutual funds legally bound NOT to sell and be invested at all times I don’t think we’ll see anything till next week, if at all.

Note the chart below ..

  • XLP/NYA – candles
  • XIV (inverse VIX) blue line
  • NOTE: a most inflections of the XIV (up or down) the ratio either led or gave a heads up that volatility would increase or decrease.
  • Our thesis is the ratio ‘should’ find support on the .382 from the all time low in 2007 and correspondingly cause an uptick in volatility and a market sell off.
  • A CLOSE (WEEKLY) BENEATH THE .382 WILL TARGET A LOWER MEASURED MOVE TARGET. IF THIS HAPPENS EXPECT SOME CONSOLIDATION OR MINOR FITS AND STARTS BUT NOTHING TO KNOCK YOUR SOCKS OFF. WOULD WAIT TO SEE WHAT HAPPENS A LITTLE LOWER IN THE RATIO.