Defining Alpha, FXI Has Out-Performed the SPX by 700+ bps Since We Suggested as Much a Month Ago

On September 7th we had a post detailing our thoughts on FXI and our belief that domestically listed Chinese equities were about to begin a period of out-performance vs. the SPX. In that post we specifically noted the following: “A long…...

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On a Relative Basis, Gold Miners Face Resistance

On a Relative Basis, Gold Miners Face Resistance

The chart below plots the ratio of Arca Gold Miners Index vs. the SPX. From 2001 to August 2011, the ratio rose to 1.60 from ~0.15. This means gold miners as a group out-performed the SPX by a factor of…

Regional Banks May be Set to Under-Perform Larger Ones

Regional Banks May be Set to Under-Perform Larger Ones

The chart below plots the ratio of the KBW Regional Bank Index vs. the XLF. As it rises, regional banks out-perform; as it falls the XLF out-performs. The ratio is breaking below trend-line support and a multi-year consolidation pattern. That…

Continue to Reiterate that Homebuilders Likely Have More Upside & Out-Performance Left

The chart below plots the post peak price bubble analog we’ve highlighted numerous times before with prices updated through today. The black line is the S&P Homebuilders Index. Our ongoing thesis has been that it will ultimately reach ~50% of…...

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GOOG Has ~20% of Additional Out-Performance vs. AAPL

GOOG Has ~20% of Additional Out-Performance vs. AAPL

The chart below plots the ratio of AAPL vs. GOOG. As the ratio declines AAPL is under-performing GOOG. The ratio has recently completed a bearish H&S pattern and has broken below support line (1). It’s next major areas of support…

Oil’s Decline Helping our Airline Out-Performance Thesis

We’ve re-visited the case for airlines out-performing two times on this site. Our last post on 9/7 was the catalyst for initiating a long spread trade in the group with a corresponding short in the SPX. On 9/14, we then…...

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Defense Industry Ready to Out-Perform?

The chart below plots the ratio of the DJ Defense Index vs. the SPX. From its 2009 highs to its recent lows the ratio declined by ~40% as defense companies have under-performed the broader market materially. The decline in the…

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…...

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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…...

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Spread Trade Opportunity in Flat Panels / LCDs

Chart below shows the ratio of PANL vs. CREE and the DJT vs. SPX. PANL and CREE are competitors – suppliers to the flat panel/LCD TV industry. Note the ratio has reached long-term resistance and is putting in a pattern…...

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