When and Where Will Transports Likely Begin to Out-perform the Broader Market?
We’ve discussed the idea of avoiding the transports in the recent past. We’ve also noted how their recent under-performance (~-1,000 bps vs. SPX over past year) is not necessarily a warning sign for the broader market. With these ideas in…...
China Back in News with Stimulus Rumors as Ratio of the SPX vs. SSEC at Major Long-Term Resistance
One of the more compelling set-ups I’ve presented in a while when you think about it in the context of what we know / think we know and the recent rumors of a new Chinese stimulus plan! The chart below…...
What Sectors & Industries Are Likely to Out or Under-Perform Moving Forward?
Please refer to my post yesterday on commodities under-performing on a relative basis over the past week despite the Fed’s pledge for infinite QE. Next refer to this post, which further emphasizes my general belief that commodities et. al under-perform moving…...
Updating the Comparison of the SPX Rally off the August 2011 Weekly Closing Low vs. Other Major Rallies Through History
The chart below compares the rally off the August 2011 weekly closing low in the SPX (black line) vs. the average rally off of some of history’s other major lows. The red line is the average rally off the 1962, 1974,…...
Long Gold / Short Equities Has Been a Generational Trade That Will Likely Continue
Since 1999 the ratio of the SPX vs. gold has declined 85%. That’s +485 bps annualized for somebody who was short the index and long gold the entire time. In the end, the logic for this trade remains quite simple:…
Financials Signaling Sustained Upside in Risk Assets?
The chart below shows the ratio of the SPX vs. XLF – when the ratio moves lower, financials out-perform. The ratio is now breaking below support line (1). This is important as every time the ratio has hit line (1) over…
Case for Airlines Out-Performing Continues to Build
All the way back on May 30 we highlighted the emerging case for Airlines sustainably out-performing the SPX. We didn’t take a strong, high conviction stance on this belief, but merely stated the “possibility” for this happening was becoming stronger. At…
Given Their Tight Correlation, Could Weakness in Lumber Prices Drag Housing Stocks Lower Too?
During the week of 8/18/12 lumber prices gapped open to start the week ~275 bps higher and at the time, were already up an astounding 38% YoY. Lumber is typically a rather subdued commodity so we thought the gap higher…...
SSEC Just Broke Below Major Support Dating Back to 1994
With last night’s ~175 bps decline to start the week, the SSEC has now decisively broken below a nearly 20 year support line (1) dating back to 1994, in the chart below. Incredibly, the index now stands ~66% off its…
Taking a Look at Market Leadership Groups
The chart below plots the ratio of the SPX vs. XLF. When the ratio falls, financials are out-performing the broader market. Since 2010, when the ratio has fallen to line (1) support, it has marked almost perfectly, broader market tops in…...