jangseohee

What would happen when XLY/XLP low is taken out?

XLY/XLP  
XLY/XLP  
1719 22 15
2 years ago
A brief recap:

XLY             is consumer discretionary sector = investor shift to luxury but not necessary things = risk appetite increase
XLP             is consumer staples             sector = investor shift to more basic needs = risk appetite decrease (more security)

As a recent spat of rally, i have noticed that there is a sector rotation play into XLP             . As a result, the ratio XLY/XLP is getting slightly smaller.

As observed from the previous two market top in 2008 and 2011, when the XLY/XLP major low (blue) was taken out on the downside, SPX             (a representative of DJIA             , DJTA, RUT & COMP) had either a major crash or correction.

XLY/XLP made another low back in Mid Oct             2014. Could the same scenario happen to SPX             again if the red line crosses below the Mid Oct             2014 low?

P.S. Excluding 2011, when SPX             kept on making higher high, XLY/XLP was making higher low. A divergence in the warning.
a year ago
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7 months ago
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7 months ago
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19 days ago
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claydoctor
2 years ago
very nice observation...
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jangseohee claydoctor
2 years ago
If would be nicer if this observation repeats as it is!!
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jangseohee
2 years ago
updates:
4 months ago, there was a peril of this ratio breaking the prior swing low, in fact twice. Oct & Dec, but somehow, price get into descending triangle and break on the UPside.
Hence, the search for clue that market has topped out is invalidated.
As can be seen at the right most, SPX is up and the ratio is UP
money flows into discretionary (Not defensive XLP), hence the RISK is still very much ON!!

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Excellent.
Yes, taking out a swing low confirms an impulsive decline here.
No new low = most likely a triangle or sideways consolidation of some sort before more up.
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morganj71
2 years ago
Hi
Couldnt agree more. Am taking stocks in Staples now over Cyclicals. Have been for a few weeks
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jangseohee
a year ago
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jangseohee
a year ago
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dime
a year ago
Thanks for the excellent analysis! Keep the superb charts coming!
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jangseohee
a year ago
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timwest PRO
a year ago
I'd like to see a mechanical buy/sell system that generates profits from this observation. It looks good initially. I don't know how you get out of a short position from the successful drops in the market and how much risk to put on when establishing a breakdown trade (there's a fake breakdown in 2006). I want to see more.
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jangseohee timwest
a year ago
i will try to figure out ...perhaps you can contribute Tim
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jangseohee
10 months ago
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jangseohee
10 months ago
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jangseohee
10 months ago
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jangseohee
9 months ago
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jangseohee
9 months ago
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Harsha_Kumar
7 months ago
Great Observation Jangseohee !!
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CosmicDust
7 months ago
No doubt central bankers are manipulating major indices like small caps and SP500, but they do not have the resources to manipulate all stocks or ETFs. And thus we see things that do not add up. IMHO, market internals are more important.
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jangseohee CosmicDust
7 months ago
@CosmicDust,
i often hear people talk about FUNDAMENTAL and yet they cant see macro fundamental from the chart, which is pretty sad for me, so i reckon this overall trend does tell us about the current underlying situation which is oblivious to the street yet..
Next i also have another chart in HG1! saying that once silver/gold ratio breaks upside, Commodities inflation is in full swing
my local commodities related stocks have been on a 45degree angle up,

the next commodities superstars will be Copper, Rough Rice, Coffee which i just announced in Agriculture chat room ^_^
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CosmicDust jangseohee
7 months ago
Congrats and agree. I watch TIP as an indicator - it broken out last month and this month it pulls back some. So far, yes inflation case still holds, but not sure how long it can hold.
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jangseohee CosmicDust
7 months ago
TIP vs TLT?
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ShPro PRO jangseohee
19 days ago
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