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

Technology – kaboom

watch this ratio as a key to provide support and resistance for technology names …

yes, technology and specifically the NASDAQ have been ROLLING. that being said, do see some resistance ahead and especially at the level indicated by the XLK / XLP ratio analysis. (technology/ staples) the level shown below has 6 mathematical derived levels all really really close to each other.

“should” provide resistance to this amazing run … that being said, appears like NOTHING can stop this run and this time it’s different and just buy buy buy as it’s all good …

OBTW, glad the REPO and sovereign debt crisis magically just went away …

one last, anyone else find it interesting that, w/ the NASDAQ soaring to new highs the ratio of the XLK/XLP is “barely” at the 50% level. if we had broad participation across the board wouldn’t this (the ratio) be making new highs?

Bart

Pay Attention to Palladium and the target that it hit …

Palladium and the NASDAQ have tracked nicely .. watch the upcoming target closely

09/28/2019 – we blogged about this long term target back in March. It was hit on Friday. When we have two 1.618 projections and extensions coming together – it should be a big deal. The other to note is the fact that we have what’s called a “butterfly sell” pattern that hit on the daily and smacked right into the long term targets from 1996. If we get a weekly close below the 1604 ish level, then advise to become defensive. Updated charts below:

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would watch the target above, very closely, along w/ the NASDAQ weakness in the coming days/weeks.

NASDAQ – heads up, big target hit UPDATE – Island Reversal Present on Daily

03/20/2018 – heads up, sure looks like an island reversal present on the NASDAQ monthly.

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not only do we have the 1.618 extension from 2000-2002 being hit but we also have a 1.27 AB=CD from the all time low and a 3.618 WX=YZ all being hit today. this ‘should’ be pretty significant resistance.

a word to the wise is sufficient …

Bart