Re: STOCKS: DESPITE RALLY, INVESTORS REMAIN DEFENSIVE!

Seeing a great idea from our dear mod Technician, i decided to check this a bit more and see if there is any tight correlation. Going backwards i actually does show some correlation in 2011 and 2007. Whenever XLY/XLP changed a trend and/or showed divergence to the price action, the stock index would go down as well. The ration was good to be used to see the top even - something you dont quite see everyday.

Still after 2000, the ratio was not the best to follow. While it was going up, the stock marktes were going down. I guess the crashes were different and one of the pair was acting differently (most probably; further checking needed). Still should one believe the current dip may be a prequel to a a-la-2008 dip, then XLY/XLP is setting up for that - there is so far a downward trading channel, and the current top in it is the current top in the stock index. Should the ratio dip below the previous trend support line (1.40 - 1.47 depending on the place), it may be 2011-type first, and then see for yourself. A good idea to monitor these still, and something i discovered for myself. Again, props to Technician for bringing this to my attention.