Airlines Continue to Out-Perform the Broader Market but is the Pace Set to Accelerate?
The chart below plots the ratio of the SPX vs. FAA (airline ETF). Note that this week the ratio is breaking below support line (1) and seemingly falling back into a channel whose bottom is defined by line (2). If…
Time to Take Profits on Short AAPL / Long GOOG Spread Trade
On October 3rd, when it stood at ~0.88, we noted the ratio of AAPL vs. GOOG still had ~20% in additional downside (i.e., GOOG had the same amount of out-performance left vs. AAPL) until it hit noteworthy support. As of…
Spread Trade Opportunity in Basic Materials
Long FCX against a copper short, but not yet. In the chart below I plot the ratio of FCX vs. copper. If the ratio is able to trade down to ~0.073 from its current ~0.088, or by ~17%, it will…...
Euro Financials Have Beat the SPX by 30% Since Summer, Now What?
The chart below plots the ratio of the DJ Euro Financials Index vs. SPX This ratio has risen by ~30% since this summer after bottoming along line (3). For some background on why Euro-centric has out-performed U.S.-centric in recent months,…...
Correlation vs. Causation – Why Has This Industry’s Relative Strength Been So Dependent on the USD Since 2000?
The chart below plots the ratio of the the S&P500 Food Retail Index vs. the SPX since 2000 in black. In green, it also plots the path of the USD over the same period. Why are these two items so…...
Long CREE / Short PANL Spread Trade Now Up 45% in Two Months; Any Juice Left in the Squeeze?
Updating this trade given yesterday and today’s big decline in PANL post EPS. The technical set-up we highlighted on 9/27 appears to be playing out as hoped for. Though the ratio is now reaching an area of support confluence in…...
Miners Appear Poised for Further Out-Performance vs. Gold
The chart below plots the ratio of the Arca Gold Miners Index vs. Gold. As you can see, early in 2012 the ratio hit extremely over-sold territory which has typically led to strong bounces whereby miners out-perform the metal itself…....
A Decade-Long Under-Performer, this Industry Could Soon See that Trend Reverse
First chart is the ratio of the DJ Specialized Consumer Services Index (DJUSCS) vs. SPX. This index is a hodgepodge of sorts but includes education & training companies, which are this post’s focal point as a source of potential out-performance…....
Spread Trade Opportunity in Semis
The chart below plots the ratio of AMD vs. INTC. With AMD’s dramatic decline of late the ratio sits on long-term support line (1). A potential spread trade here would be to go long AMD and short INTC. The trade…...
Continue to Believe that China Can Remain a Source of Out-Performance
Historically we’ve focused this thesis on the idea that such out-performance would come via the SPX. That said, with a little bit more digging, the ratio charts below also suggest that the SSEC can out-perform the companies that have historically…...