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 …

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 – wow, what a “perfect” sell pattern on the ratio – means BUY equities (if it fails, watch out) UPDATE

09/17/2016 – as you can see below, this SELL the ratio (BUY THE NYA Index) worked very nicely.  Again, for those of you new to my blog the concept is this:

  • Me or You individually don’t do a darn thing to move the market.  It’s the INSTITUTIONS that make the market.  When they get ‘risk adverse’ they move into ‘stuff’ we need to live .. aka Staples (XLP)
  • Using ratio analysis – in this case XLP (ETF) / NYSE Index (the largest index out there) we can see what ‘they’ (the collective they) are thinking …
    • IF the ratio is going UP then XLP (Staples) are stronger than the overall market … read: the institutions are moving into ‘conservative names’ and are “risk adverse.’
    • IF the ratio is going DOWN then XLP (Staples) are weaker than the overall  market…read: the institutions are moving out of ‘conservative names’ and are ‘risk on.’
    • Using PATTERNS we can ‘see’ potential inflection points for the ratio and make investments accordingly.

In the charts below we can see:

  • POLARITY – during the 2007-2009 drop, you can see that the ratio EXPLODED higher and promptly ran into major resistance. This level held for years but was finally broken thru  in/around 2015-2016.
    • The polarity principle is former R becomes Support (and vice versa) so the red arrows turn into green arrows (representing Support)
    • Based on the current length and (my opinion) an overextended market the probability of this ratio stopping at the blue highlighted region is more (again my opinion) than the ratio slicing thru this area.
      • IF it does THEN the lower level (highlighted orange) is the next logical stop.
  • ‘Basic’ Trend line channel … note we are approaching the lower portion of it
  • Multiple retracement levels – the .382 from the all time low of 2008 is key
  • An RSI finding monthly support which began every move UP in the ratio.
    • note the second chart below and what this did to the NYSE Index.
  • We have measured moves (solid and dashed blue arrows) showing the ‘largest’ corrective move in the ratio since inception
    • Note: the dashed blue line is using the “close” and not the wicks that tried to get thru this key level on the ratio

One last chart … note, IF the ratio is BULLISH then we have (again all probability) been carving out an Elliott Wave A-B-C correction labeled below.

  • w/ this type of correction the ‘C’ wave is sometimes 1.618*’A’ which you can see nicely hits where 1=5 of the C wave.  So, shown below in the light blue shaded area are potential zones for the reversal.

So, monitor this ratio for a weekly signal reversal candle (bullish) and this should market a correction .. .I’m not calling for a crash or a bear market or any of that … it’s about ‘time’ for a nice thump.  How deep it goes…? No idea but I’ll certainly be watching this ratio to give me a heads up on where to buy.

Here’s the DAILY ratio w/ NYSE Index overlaid on top of the ratio … note the ‘SELL RATIO’ and ‘BUY EQUITIES’ …this ratio works.

Here’ the MONTHLY NYSE Index:

I did a .786 AB-CD projection from the all time low in 1974 and that hit the 1.27 extension (monthly) – where we are right now.  Also, take note of the blue arrows … doing a count where 1=5 we get to 12,500 ish. So, again, would expect some sort of resistance to be forming – albeit soon.

one last … folks 2 weeks till quarter end. I hate to add opinion here but do you really think THEY (the big guys/gals) are really going to sell this market as we approach an AWESOME quarter end? Ummmmm, not I.  So, the real shenanigans should start the first week of October, if at all …

hope you have had and are having a good weekend.

Bart

 

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here’s the power of this ratio:

DANGER WILL ROBINSON … if/when the patterns fail (and they do) the market breathes in the direction of the failure. Note, we have some VERY strong thrust into the pattern level and this “usually” means the pattern will fail BUT you never know do you? So now for the best part of the pattern recognition world the “if-then”.

IF the pattern works, equities should bottom for a nice BUY (swing trade – not long term for now … )

IF the pattern fails, equities will continuing selling off and we should look for the NEXT pattern to play … make sense?

Here’s the “perfect” sell pattern:

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heads up the party’s going into the late night … might want to call Uber

12/17/ 2016 – it’s been since June that I’ve posted about the ratio.  for more information see below …bottom line is when the party is raging the “big dudes” bail out of conservative plays (consumer staples) and roll into tech and other more ‘risky’ assets.  If you look at the below – purely from technical terms, we are doing nothing more than returning to the break out resistance (now support – polarity) that held for 13 years. additionally, the rsi is at the ‘usual’ level where it has held as support – every single time since the inception of the XLF ETF.  So, yes the party is raging, but it might be time to move to water or soda or download the uber ride home … this hangover is going to hurt.

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here’s the power of this ratio:

DANGER WILL ROBINSON … if/when the patterns fail (and they do) the market breathes in the direction of the failure. Note, we have some VERY strong thrust into the pattern level and this “usually” means the pattern will fail BUT you never know do you? So now for the best part of the pattern recognition world the “if-then”.

IF the pattern works, equities should bottom for a nice BUY (swing trade – not long term for now … )

IF the pattern fails, equities will continuing selling off and we should look for the NEXT pattern to play … make sense?

Here’s the “perfect” sell pattern:

Page_16-06-27_22-40-40

XLP / $NYA – wow, what a “perfect” sell pattern on the ratio – means BUY equities (if it fails, watch out)

here’s the power of this ratio:

DANGER WILL ROBINSON … if/when the patterns fail (and they do) the market breathes in the direction of the failure. Note, we have some VERY strong thrust into the pattern level and this “usually” means the pattern will fail BUT you never know do you? So now for the best part of the pattern recognition world the “if-then”.

IF the pattern works, equities should bottom for a nice BUY (swing trade – not long term for now … )

IF the pattern fails, equities will continuing selling off and we should look for the NEXT pattern to play … make sense?

Here’s the “perfect” sell pattern:

Page_16-06-27_22-40-40