timwest

Short Financials XLF versus Long Utilties XLU

BATS:XLF   SPDR SELECT SECTOR FUND - FINANCIAL
350 2 1
Note the massive divergence of 20% in the spread between the performance of Utility Stocks (lagging) and Financial Stocks (leading) just since the beginning of the year.

This spread will likely close and provide an excellent profit opportunity for long/short traders who specialize in arbitraging the difference in various sectors.

Whenever one market keeps its momentum long past the time a related market loses its momentum and succumbs to selling pressure, once the following market breaks, it often catches up quickly.

Note the XLF             up in the stratosphere while the XLU             is down in the ground. Although the components of the XLF             are vastly different from inception, they still represent a vast cross section (even Berkshire Hathaway             has a decent position in XLF             ) of financial firms.

Risk 3% and target a 10% gain over the next 30 days. Risk is defined as the loss on holding equal dollar positions long and short. If you have $10,000 in long positions, 3% of $10,000 is $300. Target return is $1000 per $10,000 on one side of the market.

Tim 12:04AM Wednesday EST, June 5, 2013
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Great View thanks
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Intermarket analysis usually has these two going higher in Stage 4 of 5 with bonds going down. Interesting to see Financials holding up here and Utilities getting pummeled
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