Airlines Extended $XAL - Ripe for a fall relative to RTH Retail

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The retail index ( RTH             - retail ETF by Market Vectors) has been topped out for 17 weeks now, but someone forgot to tell the Airline Index             which has been pushing new highs for this bull market like there was no worries in the world.

I don't have a specific catalyst to break this ratio, but I do some some trouble on the daily charts of individual airline stocks. Delta, for example, is sitting at a level where 10-days have traded and it topped out in price 15 trading ago and 6.4% higher, so the momentum of buying has stalled and seems ready for a test to the downside.

The last time this wide of a performance spread showed up between these two sectors, there was a massive slide in the far more volatile airline index             ($XAL). Note the red arrow on the chart.

The red box notes the previous time when the retail index had topped out while the Airlines kept soaring ever higher. The current market action in the retail ETF seems to be mimicking that last time to some degree.

Risk 10% loss to make 15% on the pair: XAL             short versus a long position in RTH             . More exact details to follow.

Tim - Sunday, 10:18PM EST, March 30, 2014

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