As I was telling a technician friend lately, the market is a two-headed beast these days.On the one hand you have financials, represented in the first chart by XLF, the financial ETF (it's actually the chart of the ratio XLF/SPY), which are in the middle of what could be an epic bear market. On the other hand, you have the technology sector, represented in the second chart by QQQQ, the Nasdaq 100 ETF (again it's the ratio QQQQ/SPY) undergoing a no less impressive bull explosion.
It appears that a good trade would be long QQQQ, short XLF, a gift that could keep on giving for quite a long time as these secular trend changes tend to last.
As far as the market in general (as represented by SPY), given the tug of war going on, it is much harder to trade.
2 comments:
Interesting how these two trends behaved this week, each reversed and is pulling back to its respective moving average - next week should be exciting, to see if the larger trends reassert themselves.
you're right. it feels a little bit like mid-august when the strongest stocks were tanking and the weakest rallying.
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