Banks – where are they?

there is an old adage – the banks lead you up and lead you down. the market has blasted to old all time highs or thru them and the banks…? well, they rallied a little but have not shown the strength of the overall market, especially technology.

let’s keep a close eye on them over the coming days and weeks … important.

here’s the support charts that I posted back in the past to show the patterns at work – it has NOTHING to do w/ me. I just pull out the crayons and try to find the patterns. keep it simple.

this chart was finding support at the “first” level after a pretty liquidating sell off from 112. pay attention … a LOT of math and patterns coming together. One of the key aspects of the chart below (if you have read this far) is watching for former FAILED PATTERNS.

as you can see, that level worked and the banks rallied … I apologize for not having the SELL pattern but I never posted it. Do you see it? After not making it above the 117 level it sold off big time … and, using some math and patterns we found a support zone ….

in the chart below I show you the SELL PATTERN on the banks. YES, this is after the fact and I DID NOT post this at the time but wanted to show 1/the harmony of this index and 2/ the pattern for illustrative purposes. the other reason for posting this is to demonstrate the bank rally off the March 2020 lows has been feeble …

and as we can see, the banking index / NYSE Index is tepid, at best. really don’t think the banks are too healthy right now …

XLK/XLP update – Ratio Analysis and the power of waiting

last week, blogged about parabolic arcs and showed how we could use geometry to POTENTIALLY (the only operative word in investing) to look for inflection points. if your new to the blog, you’ll find a chart that has been replicated a couple times over past couple weeks /months for an area or zone of resistance. in fact, here’s a print to screen where JC (www.allstarcharts.com) and I were talking about this level … we discussed it ramifications to manage risk. this level was known 4-6 weeks ago and was discussed about it being respected. the past couple days market action can tell you why this was a smart move …

if this zone held, then technology would lose some steam (so to speak) and rotation into less volatile names (staples) would occur. at my last count we had 6 different projection techniques and math coming into this area.

when it broke above it – on a daily basis – I was somewhat surprised but it’s all probability, right? so, I blogged to wait for an open and a close above our targeted area/zone. we DID NOT get an open and a close above our area so the resistance was still on .. that is what I mean waiting for a signal reversal.

signal reversal candle (bullish) = the ‘high’ of the ‘low’ candle is taken out on close

signal reversal candle (bearish) – the ‘low’ of the ‘high’ candles is taken out on close.

when we come up w/ levels, waiting for an open/close above or below a certain level is the smartest way to play it. this is what was recommended … we have a LONG time before the month ends (for the monthly candle) but we can monitor via weekly and daily …

no need to rehash old news .. the zone has been hit. you read the blog – to find out where it COULD (there’s that probability connotation again) go …

using the basics, for now, I have used measured move corrections (blue and orange arrows) and rudimentary retracement techniques to come up w/ an initial set of targets.

folks, this might not even be the top to do all this work … it COULD GET ALL REVERSED TOMORROW.

keep the erasers and pencils ready, this is going to get interesting …

thanks for reading – Bart

XLK / XLP – still has major resistance just a little higher!

we had a sell off on the ratio a couple weeks ago BUT there was not follow thru and we still have the lingering level just a little higher which is the real test … again, until we have a strong weekly close above this level I’m in the conservative/flat camp as far at the NASDAQ and Technology goes …

the ratio has HUGE support

can’t believe it’s been since mid-april since I posted about the market. at the time, I spied a triangle forming which proved to be wrong and it broke down and the market has continued it’s advance. humbling for sure .. when I was working up the triangle thesis I came up w/ the level that’s shown below but, honestly, I shrugged it off. “it’s not going to go all the way down there, I thought .. ” but I do remember saying, “if it could get down there, then what a perfect spot to short the market.”

folks, we are there … don’t hold me to it BUT I have around 12 reasons that this is HUGE support for the XLP/NYA ratio. don’t need to go back over the importance of this ratio … for a summary when ratio goes up risk is off and when ratio goes down risk is on. UP = bad equities. DOWN = good equities. so support should mean bad equities.

put/call ratio at an extreme, sentiment at an extreme and MONSTER support on the XLP/NYA ratio. probability says support holds and equities top and start back down … all for now. let me know if you have any questions.

disclaimer: this is ALL probability but we now have a very well defined street sign. the market COULD blow right thru the level below and it’s a rocket ship takeoff higher … that is also a probability.

so, play it safe … if it bounces strongly in / around this area then short BUT if it closes on, say a weekly basis, below the defined target area w/ conviction then be long. but for NOW, would wait and see which way she goes. hope this helps.

be safe out there …. Bart

XLP/NYSE Index ratio – BUY

this ratio xlp/nya is a GREAT guidepost .. buy pattern complete. if it holds and starts back up expect selling to being again .. KEY LEVEL

for those who follow this blog – remember – it’s all about PATTERNS and I try (operative word) to remove any subjective analysis from the mix. PATTERNS work and sometimes they don’t …

additionally, you’ll see here – https://bartscharts.com/2020/03/23/xlp-nya-ratio/ that the XLP/NYSE Index ratio has been a good guidepost for BIG inflections UP and DOWN for the equity market.

today, at the low on the ratio, we completed a BUY PATTERN. we do have a little lower for other targets to get hit but, essentially, we have a BUY PATTERN complete and, if it works (operative saying), THEN the selling should resume …

if it fails, which it certainly could, then this is a very bullish development and the rally will continue .. patterns like this, when they fail, are usually face rippers so time to hold on and see which way the market Gods would like to go …

XLP/NYA ratio …

ratio slowing it’s advance .. pay attention for “trade” like support …

we have a pretty big ‘wick’ up at the all time high on the ratio and closed w/ a doji today at the level that’s basically equal to the close on Friday. Basically, even though we were down 500+ the ‘fear’ subsided w/regards to the Staples/NYA ratio. this lack of follow thru is telling .. is the low in place, yet. I HAVE NO IDEA but I do trust this ratio .. until we CLOSE ABOVE the blue rectangle area on a WEEKLY basis I’ll move to a neutral stance in the equity market for now … trading bounce (not necessarily a long term investment buy) appears to be working into the vernacular …

the ratio … what’s it saying

…. ratio has exploded but appears we are running into stiff resistance

if you want to take a peak at what we’ve been doing w/ the XLP / NYSE Index (Staples/overall market) then search for XLP on the site at the top right of the home page …we very clearly saw the ratio bottom and start back up (which means, on a relative strength basis that staples were starting to outperform (negative for equities)) back in late December and January. what is fascinating to me is the STRENGTH and VOLUME of the candles of late. frankly,they are blowing away the candles from the 2007-2009. it sure looks like, from the ‘big boy lens’ (hedge funds, relative value funds, institutions, etc.) that they are moving into the safer names (staples) in a BIG WAY. I trust this ratio because, as you can see, it’s been responsible for guiding the MAJOR tops and bottoms since the XLP ETF was created back in 2000.

per the chart below, we are in uncharted waters … however, note the blue rectangle areas. if we take these areas and then look at the NYSE Index that I just blogged about earlier THEN we could very well see a sustainable bounce (note I did not say end of the dumping) but a bounce … so, pay attention to the level on the NYSE Index and also the blue rectangles below …

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 …