XBI Compared to TLT using 1 MONTH 30 MIN DPO 63
TRADE THIS
XBI long when the DPO is above the 0 line. XBI short when crossing below the 0 line. Using it to compare to TLT provides a sentiment overlay: Higher TLT is risk-with lower implied interest rates; Lower TLT is risk-off with higher implied-interest rates. XBI is the most interest rate sensitive as the index contains the least amount of dividend paying stocks and benefits the most in a lower interest rate environment. Therefore, XBI and TLT should maintain inverse correlation.
Using both TLT and XBI with DPO should provide price direction guidance
FUNDAMENTALS
XBI is an exchange-traded fund (ETF) that tracks the performance of the S&P Biotechnology Select Industry Index. It includes companies in the biotechnology sector, which is known for its volatility and potential for high growth.
TLT is an ETF that aims to track the performance of the ICE U.S. Treasury 20+ Year Bond Index.
TLT is composed of long-term U.S. Treasury bonds. It is often used as a gauge for investor sentiment and economic outlook.
Detrended Price Oscillator (DPO):
The Detrended Price Oscillator is a technical indicator that helps identify cycles and overbought/oversold conditions in a market. It calculates the difference between a past price (usually the closing price) and a moving average of the price over a specified period.
The DPO is useful for identifying short- to medium-term cycles or trends by removing the longer-term trend from the price. If you are using a DPO of 63 periods, it means you are looking at the detrended price movements over the last 63 days (or whatever time frame you're using).
A positive DPO value indicates that the current price is above the historical average, suggesting a potential uptrend. A negative DPO value suggests that the current price is below the historical average, indicating a potential downtrend.
IMPACT
To compare XBI to TLT using DPO, you would look at the DPO values for both XBI and TLT over the same time period (63 days). The comparison of DPO values can provide insights into the relative strength or weakness of the trends in biotech stocks (XBI) compared to long-term Treasury bonds (TLT) during that period.
XBI long when the DPO is above the 0 line. XBI short when crossing below the 0 line. Using it to compare to TLT provides a sentiment overlay: Higher TLT is risk-with lower implied interest rates; Lower TLT is risk-off with higher implied-interest rates. XBI is the most interest rate sensitive as the index contains the least amount of dividend paying stocks and benefits the most in a lower interest rate environment. Therefore, XBI and TLT should maintain inverse correlation.
Using both TLT and XBI with DPO should provide price direction guidance
FUNDAMENTALS
XBI is an exchange-traded fund (ETF) that tracks the performance of the S&P Biotechnology Select Industry Index. It includes companies in the biotechnology sector, which is known for its volatility and potential for high growth.
TLT is an ETF that aims to track the performance of the ICE U.S. Treasury 20+ Year Bond Index.
TLT is composed of long-term U.S. Treasury bonds. It is often used as a gauge for investor sentiment and economic outlook.
Detrended Price Oscillator (DPO):
The Detrended Price Oscillator is a technical indicator that helps identify cycles and overbought/oversold conditions in a market. It calculates the difference between a past price (usually the closing price) and a moving average of the price over a specified period.
The DPO is useful for identifying short- to medium-term cycles or trends by removing the longer-term trend from the price. If you are using a DPO of 63 periods, it means you are looking at the detrended price movements over the last 63 days (or whatever time frame you're using).
A positive DPO value indicates that the current price is above the historical average, suggesting a potential uptrend. A negative DPO value suggests that the current price is below the historical average, indicating a potential downtrend.
IMPACT
To compare XBI to TLT using DPO, you would look at the DPO values for both XBI and TLT over the same time period (63 days). The comparison of DPO values can provide insights into the relative strength or weakness of the trends in biotech stocks (XBI) compared to long-term Treasury bonds (TLT) during that period.