Just making a simple observation here. I understand that XLU is a defensive sector when market is having some turmoil or uncertainty.
Comparing the ratio of XLU/SPX to SPX, i noticed that in 2000 just before Dotcom bubble burst, XLU/SPX ratio is at the lowest. For the next 4 months, SPX made another top but XLU/SPX has made a higher low suggesting that fear had started growing.
In Feb 2009. we have a situation where market was tumbling like there is no tomorrow while the XLU/SPX ratio peaked!
Currently, XLU/SPX again has made a lower high, does this signify that fear has started growing? Am i expecting market crash any sooner..? I don really think so.. but some kind of correction perhaps.
If this cycle holds true, and we will probably need another 3165 days counting from Feb 2009, to reach that next full cycle when SPX bottom (XLU/SPX peak) whichi is around Aug 2017
Comments
jangseohee
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i know line chart is not a good measure... but , well
jangseohee
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the zone between the green and blue line around 17200 is considered a make/break zone
ChartArt
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A corporate tax adjusted version of Shiller's CAPE: