Reply #1: WrapUp by Ike Iossif [View All]

[ozymandius]

Ratio Analysis

One of my favorite types of analysis is ratio analysis, because it tends to reveal when the historical numerical ratio between correlated markets/sectors is at extreme points, and thus, ripe for reversal.

For the past ten years, major bottoms in the Dow have occurred
when the Dow/Oil Ratio dips below 200.

The SPX/XLE ratio is telling us that the oil sector is near a short-term top.

Summary

The ratio analysis is telling us that more than likely we ought to expect for the intermediate term: higher oil prices, higher interest rates, lower equity prices and a secular top in the financial sector. In the short-term, we ought to expect a higher dollar and lower gold prices.

lots of charts