XLK/XLP update – Ratio Analysis and the power of waiting – update 11/5

11/05/2020 – yes, some insanity is ongoing everywhere. that being said, we trust PATTERNS and tune out all the noise. In this case, we had the expected reaction to the resistance levels sighted below and, now with this rally, we have another SELL pattern coming into play. SELL THE RATIO = SELL TECH.

NOTE – WE HAVE A LOT OF THRUST AND BREAKAWAY GAPS COMING INTO THIS LEVEL. this begs “caution” so, w/ the euphoric tech rise, it’s not a stretch to expect this level to get tagged and, frankly, get blow over and fail. but, that being said, it is a SELL XLK/XLP ratio so .. .watch closely.


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