I’m really liking this market! Which always makes me worry. If things are going against me, I feel bad. If things are going my way, I worry. Quite a personality, right? But let’s take a look at a few ratio charts.
Here we have the IWM divided by SPY, which suggests to me that small caps are probably in trouble Real Soon Now.
Premium members will recognize my Most Important Chart Ever (MICE). It’s getting close to that midline. What a tumble this has had, eh? At some point it’ll bounce back toward the neckline, which means either recording equities or shrinking interest rates. Hey, not so soon, right? I’d like to see equities keep sinking, if you don’t mind.
The XME/GDX chart has absolutely blasted higher. I don’t think this is sustainable. If not, it means a weaker XME quite soon.
Finally, and my favorite of these four, is RYT divided by IEF. This shows that equities (represented by RYT) are still crazy-high valued versus bonds (IEF). In other words, we could be just getting started.