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?
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.