the ratio “finally” appears to be attacking THE crucial pattern in this charts history …
We’ve been watching this ratio for over a year and never thought the BUY pattern would get tested. Certainly looks like that will happen.
This is THE level to watch for the market to continue its climb or correct … it’s that simple.
Many things have pointed to a market at current levels to expect signifigant resistance. Some has held, some hasn’t and, to be honest, I’m literally throwing up my hands and saying “just give me a pattern” … the ole XLP/NYA.
I didn’t know what to call this post, so I just put the date.
Over the weekend, I read everything from “we have another 4-5 years in this bull run” to an Elliott Wave label of a Grand Super Cycle III and my good friend and mentor Larry (trading daily for the past 50+ years) talk about a monster top here or inbound.
I
DO
NOT
KNOW
Just looking for a pattern … the CLEANEST PATTERN I SEE IS MY OLD TRUSTY XLP/NYA.
First, take a peak at this ‘static’ cycle – it was near perfect for about 15 years and then, w/ the recent cycle, it has failed. Hmmmmm ….
So, one would think w/ the measured move, the ‘timing’ and the patterns that we would have seen a more pronounced sell off. We did for a little bit but it still didn’t appear to be the ‘real pattern’ – that was lower.
Over the past year it’s been pretty frustrating, at least for me, in that I had a ‘bearish’ bias since the patterns that were completing was from years ago and sometimes 100’s of years ago. Why not at least expect a nice thump … well, some of the patterns have held, others worked in didn’t, some got smoked and some are still out there ….
This pattern, a little bit below is MASSIVE in it’s ramifications. From a simple ‘chart’ perspective it’s the first MONTHLY ABCD BUY PATTERN that is simply near perfect.
So, for my BULLS out there, you want this pattern to fail and if you can take all the gyrations that appears to be happening in the market I would hold your longs until the “short stocks” level.
And, for the BEARS, it certainly looks like the play to keep your sanity is to WAIT for the “short stocks” level to be hit on the ratio. Then, you have a well defined zone to understand your risk. We could be starting down hard … some think so. As discussed earlier, I have no idea. Nope … but, that level is SO BIG and we have so many ‘bearish’ fundies coming into play …
I sense a nice top is here or coming ….
Looks like the ratio is going to break support. WAITING for a firm weekly close below …
As discussed previously, I’m hawking the XLP/NYA ratio. Noticed, yesterday, that even w/ the market flat/slightly down the ratio was trending lower. Sure looks like it wants to break support and go down to the pattern completion level at the .786. That’s bullish …
However, take note of the time cycles … it’s forecasting a ‘low’ in the ratio now – August.
To show the importance of this ratio, I put the NYSE Index (NYA) on top of the XLP/NYA ‘static time’ cycles and you can see that – while not perfect (remember this is a monthly chart and we could have some slippage in the overlay) it’s not a stretch to say that when the ratio has bottomed, the market has topped or topped soon thereafter w/ a month or so.
This market ‘could’ explode higher when we lose this support … all I know is we have 18 years of some pretty accurate ‘static cycles’ shown.
I’ll stay the course … need a WEEKLY close below the “15 year support zone” before initiating a long position.
I’ve been having a lot of fun over at https://www.stockmarkettv.com/ – check out some of the most recent posts: https://www.stockmarkettv.com/james-bartelloni
PS – no reason for the wave picture, I just felt like it would be a cool snap to put as a featured image.
The XLP/NYA ratio is approaching KEY resistance. If this resistance holds, then the market (s) should find support …
Well, looks like the market broke …LOL.
For support, our first target has appeared nicely.
Watch this level on the XLP/NYA … probably tomorrow or Monday the way things have been going.
Also, don’t forget about the 1×1 trendline from the all time low on the NYA … if bullish, this should offer some support …
More targets, albeit lower, are appearing …
I sense/believe (therefore probably wrong) that this rally will be a chance to fade and short again.
While I’m aware, obviously, of the tariffs I’m not paying attention to any of it. The patterns warned us all the way back in December.
Folks, we have two nice projections into what SHOULD be support … hate to say it, IF these patterns fail, then this could REALLY accelerate to the downside. Stay vigilant …
The 1×1 on the NYSE Index will be key to seeing how much steam the bull run has left in it …
Well, that accelerated quickly. I was briefing some amazing peeps last night on Stock Market Media and was fully expecting a rally into, at least, a .382. Scratch that …
Perhaps the ‘set wave’ that I was discussing last night is upon us?
What’s important, now, is the 1×1 trendline from the all time low …to keep the bull rollling I would expect it to hold as support … a weekly close below, we could be looking at a 30% correction. Why 30%? That’s what all the others one have been of late …
Something else to watch, YEN and the banks. When the YEN has strengthened (from a relative strength perspective) against the XLF we have hit stiff resistance. Note, the ratio is JUST starting to turn up so … keep an eye out for this ratio.
Note – doesn’t look like the XLF is going to make that upper target anytime soon, at least on this run.
No kidding, I’m going to grab a surf … a LOT of rain for SoCal inbound …
BIG MOMENT of inflection here … this support needs to hold for a correction to unfold or we could be exploding higher.
For those of you who have been following this blog, you know how much I “lean” on the XLP/NYA ratio.
It’s one of the best tools to monitor ‘institutional money flow’ or ‘risk on- risk off’ appetite of the ‘big guys.’
Ratio goes UP then the numerator is stronger – XLP.
Ratio goes DOWN then the denominator is stronger – NYA.
Going up signifies rotation (the Staples are getting stronger from a relative strength perspective) and stocks correct or going down …
Going down signifies “risk on” as the institutions are rotating out of defensive names and have a more “riskier” appetite.
A few weeks ago, we did the near perfect PRICE and TIME corrective move in the XLP and the importance was the correction was the largest measured move correction since the XLP came on the scene in 1998. Pretty big deal …
At almost the same time, the NYA was smacking into the 1.618 price projection from the all time low and beginning of the NYSE. We had LONG TERM price projections hit in BITCOIN, Transports, Semi-Conductors, etc.
Time for a correction – right?
Hold your horses … for only the second time in 14 years we have penetrated a long term horizontal line of support and we are sitting right on two very important ratios.
Take note, the two times we did penetrate this level (appears to be two months in a row) we sprung back (the ratio) and it led to an almost 2 year correction.
So, PAY ATTENTION TO THIS LEVEL as it’s not a far stretch to believe that this level gets smoked to the downside and we vacuum down to the .786.
We are a BIG point of inflection … stocks stop here OR the can explode higher and higher.
WOW.
XLP/NYA ratio approaching KEY support
We’ve discussed the ratio many times …
It hit a VERY nice PRICE AND TIME target and rallied nicely. Recently, as the stock market continues its relentless advance, it has pulled back as expected.
Now, we are close to VERY important support for the ratio … IF we find support and the ratio starts back up THEN we are in the beginning phases of the “risk on” phase as staples start to outperform, on a relative strength basis….
Pay attention … also, note the ‘basic’ static time cycle component …
Big TIME and PRICE PATTERN completing/completed. Heads up to equities ..
For the market (US Equities) to continue higher, it will need to break the support level on the XLP/NYA.
Take note – it’s a PERFECT TIME AND PRICE correction equal to the last ‘largest’ corrective move.
As long as this holds, expect downside pressure on the equity market.
The market relentlessly continues its push higher and higher and higher. Will this rocket ship ever run out of gas?
Folks,
have to admit, somewhat ‘surprised’ at the continued strength of the US equity indices.
the YEN ‘surprise’, the all time low square out on the NYA, the perfectly harmonic measured moves on the DJIA, etc. etc. etc. and the market just doesn’t seem to care.
so, we have ‘another’ major target on the NYA a little higher (about 4-6%) and that “SHOULD” cause resistance but …who knows.
Love ratio analysis and also love using the PATTERNS w/ it …
Here’s the S&P 500 / VIX ratio.
Note the resistance area we are at or maybe a little higher. Also, take note how high the ratio is compared to, say, 2007? WOW.
My musical note log projection got SMOKED today and so did the PATTERNS. I’m not there yet, mostly because the broader market really didn’t participate .. the DOW and R2000 but the other indices were barely up.
I’m about to throw my “short” strategy in the trash can … another up day like today on WED will have me take out the eraser.
No worries, the PATTERNS aren’t perfect … but man did this one sure look like a GREAT set up. We’ll see …
