For those of you who have been following this blog, you know how much I “lean” on the XLP/NYA ratio.
It’s one of the best tools to monitor ‘institutional money flow’ or ‘risk on- risk off’ appetite of the ‘big guys.’
Ratio goes UP then the numerator is stronger – XLP.
Ratio goes DOWN then the denominator is stronger – NYA.
Going up signifies rotation (the Staples are getting stronger from a relative strength perspective) and stocks correct or going down …
Going down signifies “risk on” as the institutions are rotating out of defensive names and have a more “riskier” appetite.
A few weeks ago, we did the near perfect PRICE and TIME corrective move in the XLP and the importance was the correction was the largest measured move correction since the XLP came on the scene in 1998. Pretty big deal …
At almost the same time, the NYA was smacking into the 1.618 price projection from the all time low and beginning of the NYSE. We had LONG TERM price projections hit in BITCOIN, Transports, Semi-Conductors, etc.
Time for a correction – right?
Hold your horses … for only the second time in 14 years we have penetrated a long term horizontal line of support and we are sitting right on two very important ratios.
Take note, the two times we did penetrate this level (appears to be two months in a row) we sprung back (the ratio) and it led to an almost 2 year correction.
So, PAY ATTENTION TO THIS LEVEL as it’s not a far stretch to believe that this level gets smoked to the downside and we vacuum down to the .786.
We are a BIG point of inflection … stocks stop here OR the can explode higher and higher.
WOW.
