Tag: ratio analysis

One of the most important charts out there … R A T I O P O L A R I T Y

11/20/2018 – so, this ratio is running the show right now.  if you read the below NONE of this should be a surprise as the PATTERNS worked and the XLP/QQQ buy pattern has taken off, causing a risk off mindset and the NAZZIE to get blasted.  That being said, all is not lost. While I do think we have some more carnage to come, ultimately the ratio is going to smack right into a very strong trend line and the technical analysis concept of POLARITY should cause support or THE bottom for a GREAT BUY.  The chart below should give you and idea of why the area labeled ‘resistance’ should offer strong support for the institutions and offer a great BUY of the Q’s and technology.

let me know if you have any questions.

B

 

10/21/2018

note the ratio .. we have a pretty nice bullish engulfing pattern on the ratio which is precursor to potentially further weakness.  If looking to BUY the Q’s would definitely wait for a nice sell pattern or overhead resistance to be hit before stepping in …certainly appears to have some room to run.

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here’s the QQQ on a daily time frame w/ the target zone denoted. sure looks like another wave of selling should be starting to complete a 5 waves sequence.  Is that A or 1 … if A, then a rally should occur followed by more selling and then a BUY. If 1 then we have, potentially, a lot more downside to come.

I do not know or care which it is ….1 or A.  Just looking for a pattern.

Also, doing a monthly log below to look for key trend line support or breaks.

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In July, we noticed this pattern completing. Yes, we went 3 points thru but the RATIO held and popped big time today.  Watch the median line shown below on the XLP/QQQ and see if price goes thru the line then the sell off could continue.

Thanks!

Bart

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should have done this one before – not sure why I didn’t …

so, the NASDAQ looks unstoppable … we have sell patterns on the DOW, the S&P, the NYSE Index but the NASDAQ is moving into new territory and it sure looks like finishing/close to finishing a 5 wave sequence.  So, why not do the XLP / NASDAQ?  Honestly, I don’t know why I haven’t done this one before. I’ve always looked at the NYSE Index or the S&P versus the XLP. One would think that the high flyer would show tendencies to pivot UP or DOWN based on risk on/off mindset by the institutions, right?

so, here’s the XLP / NASDAQ and it paints a nice picture.

of note:

  • XLP/NASDAQ
    • note the AB=Cd pattern that is completing and showing a bullish hammer as of this past Friday’s close.
    • RSI – been pegged at the lowest levels since 2000 and has finally showed some bullish divergence.
    • we are BELOW the .786 retracement BUT we are not at new all time lows (vice the NASDAQ that is all all time highs)
    • there is another level for targets lower (.886 retracement and 1.618 extension) if this level gives away …
  • XLP/NASDA w/ the NASDAQ overlaid and INVERTED
    • NOTE – EVERY major pivot higher/lower has been at a pivot of this ratio .

Folks … don’t get complacent as there is a very large probability that the next move  – across the board – is down.

Just calling it like I see it …

Happy Father’s Day!

Bart

XLP / S&P 500 – support here is justified and, perhaps, a signal of volatility to come? UPDATED 11/04/2018

11/04/2018 – back on June 09, 2018 we saw this – almost – perfect pattern hit support.  it’s the ratio of XLP / S&P 500 – we use ratio analysis to look for ‘risk on’ or ‘risk off’ mindset from the big dudes. in times of ‘risk on’ the ratio will go down as the big dudes / dudettes are not in defensive names (like staples) and when the ‘risk off’ mindset is present then the ratio will go up. i.e. the XLP is ‘outperforming’ from a relative strength perspective.  the ratio completed a harmonic BUY pattern back in June and it took another 4 months before the market topped.  one could conceivably say the rotation occurred in the summer.  I’m posting the updated chart below … try and follow the bouncing ball of CONFIRMING indicators that the ratio was bottoming ….

where are we now? as you can see on the daily below we were DEFINITELY being warned w/ another near perfect BUY pattern on the ratio 10/04/2018.  it exploded higher … I see a little more consolidation/ corrective form in the ratio an then another move higher to complete an inner 5 wave sequence.  that’s when the ‘real’ pattern emerges.  I DO NOT KNOW, yet, if this is an Elliott A-B-C corrective move (bullish for stocks) or a 1,2,3,4,5 wave sequence that foreshadows the ratio going higher (bearish for stocks) … were just going to have to chill and wait to see what unfolds.

here’s the ratio ‘dates’ on top of the S&P 500 cash.  again, somewhat in no mans land as we wait for the next BUY or SELL pattern to emerge.  But, in the end, believe the ratio gave us ample time to position our portfolios accordingly – either the bear or bull you are. I’m neither … just a pattern recognition dude using some crayons to draw cool pictures and patterns.

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there is a different look/feel to the XLP / SPX versus the XLP / NYA. If you look at the chart below, you’ll see we did a pretty tight consolidation from 2011-2016 in the XLP / SPX.  It’s a ‘perfect’ sell pattern at “C” that complete and then the ratio fell out of the sky.

i’m curious at the lack of follow thru w/ regards to the S&P 500 (not making new highs like Russell, NASDAQ, etc) so I decided to take a look at this ratio instead of NYSE as the denominator.

as you can see we have some key observations:

  • take the time to study ‘past’ retracements as ‘sometimes’ the same ratio/vibration (remember that’s all it is – vibration) is present. In this case we have the .707 retracement level present at the high and now here at the lows
    • 2
    • Square Root of 2= 1.4142
    • 1/1.4142 = .707
  • the harmonic 1.27 is present in that 1.27*AB = CD
    • 1.618
    • square root = 1.27
  • note the blue measured move arrow from the XLP inception in 1998 is present in this correction
  • the MONTHLY RSI is at the lowest level since the inception of the XLP and this ratio of XLP/SPX
  • THE TIME OF THE CORRECTIVE MOVES OF THE RATIO ARE EQUAL

what am i trying to get at? nothing more than I’m very cautious of any further up move in the markets (for now) .. .historically, when the XLP starts to perform it signals a ‘risk off mindset’ of the big institutions and volatility starts to rise …

while I DO NOT think the bull market is over by any stretch, I do think that another move lower is in tune (note the music reference :)) w/ the form, balance and proportion we are used to seeing from a corrective nature.

Bart

Crude Oil Update, ratio of XLE/NYA, HYG and Crude and a bunch of other stuff

11/10/2018 – overall, our key 75-76 level was hit and has caused the sell off. take a look at the charts below …

some critical developments:

  • the XLE/NYSE Index ratio has hit a perfect BUY PATTERN so expecting the energy complex to bounce/hold/consolidate as this level holds.  IF IT FAILS then the sell off will be pretty immense. So watch t his level.
  • on the Crude, anytime you have a .382 and .618 (.382+.618 = 1) present that should act as important S or R. In this case SUPPORT. we have some polarity present also so ‘expect’ a bounce in Crude … will update accordingly.
  • also, note the correlation between crude and HYG. (High Yield Bond ETF) … perhaps the carnage in Crude will stop at support levels indicated which ‘should’ keep HYG at bay (if the correlation is still holding) but if Crude busts thru then that support cliff for HYG should give away and then it will get very interesting
  • also, put the oldie but goodie of the HIGH on crude on my birthday and the subsequent low to show some geometry at work and the fact that long term charts can certainly help .. .a famous quote “there is nothing new under the sun.”

thanks reading …. B

 

 

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06/03/2018 – sorry that i didn’t send out the charts below via my blog .. honestly, I think I just forgot and then went on some travel …big thing here is we hit an important high a week or so ago based on TIME so this could be a very important top in crude.

honestly not sure if we have completed a 4 ( if YES we have  BIG MOVE COMING lower) or an end to a bullish bounce and we are correcting to buy ..

either way, this should do it for crude for a while at least. will be watching and, again, apologize for not blogging earlier.

as an FYI, the charts are real time they were just sent out via email …

let me know if you have any questions.

Bart

this is the update as of 06/001/2018:

Technology vs Staples (XLK / XLP) Ratio Analysis

I like Ratio Analysis … I also like to work w/ the patterns on these charts.

If you have been reading my blog for a while, you know that I ‘try’ (the operative word) to not read, watch or listen to any ‘other’ financial news commentary. Yes, there are people that I follow and am very interested in what they see/say (most are the same as me) but I can tell you that NONE of the people I follow or read are fundamental analysts.  Not that they don’t do good work (they do) I’m just not smart enough to understand the information they put out. For me – it’s much easier to use crayons, some geometry and PRICE and TIME and PATTERNS to try to manage risk.  The ‘why’ and the ‘blah blah’, again to me, is just noise.

so ratio analysis:

X/Y – if the chart goes up then X is stronger.

X/Y – if the chart goes down then Y is stronger.

X = XLK (technology = risk on) the Y = XLP (staples = risk off)

XLK/XLP – going up w/ strength. the big guys (institutions) aren’t showing a ‘risk off’ mindset.  the XLK/XLP ratio move up is the LARGEST SINCE THE LOW OF 2002.

So, for me, while we might shuck and jive and perry left, perry right until we have a monthly bearish signal reversal candle I can’t join the camp of the sky is falling and all that jazz.

Bart

back at it … just got back from a week long Stand Up Surf Camp … where are we now?

amazing week in Punta Mita Mexico … after my daughter got married my wife ‘allowed’ me to take some R&R.  Worked hard for a week on my SUP skills w/ these guys: https://supnsurfretreat.com/

if you have any interest in Stand Up Paddle Surfing do this … shout out to Chris Sfor ALWAYS being patient w/ me.  If I see you out on a wave this summer I promise I’ll at least know what a line up is … can’t promise anything else. Thank you, Chris, for the push.

before that saw 3 straight weeks of travel so I just ‘checked out’ of the markets for almost a month.

came back to the charts and what do I see … a PERFECT SELL PATTERN on the S&P.  if your bearish, this is the level …

the only thing that is keeping me cautious and in a wait and see mode is the XLP/NYA ratio.  Folks, it’s in full grunt liquidation mode.  again, this ratio is a great harbinger of understanding institutional big guy mindset.  IF they are risk OFF then the ratio should be going up if they are RISK on then the ratio falls – as it is now.  note the support levels shown a little lower …until this ratio finds some stability and support I just can’t be overtly bearish….

good to be back – trust all are well.

Bart

 

 

RATIO ANALYSIS of XLP/NYSE Index – ain’t bearish folks, yet (UPDATE June 3, 2018)

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.

Bart

 

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 …

Bart

PS – note the CYCLE (basic) time rolls into sometimes this month of April. And, we are in April so stand buy …

 

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 ratio analysis update

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.