etfmsolutions: XLF / XLK Skew Widens..7.22.13

Monday, July 22, 2013

XLF / XLK Skew Widens..7.22.13

On the heels of the previous XLK post today's market action pushed the XLF / XLK skew to the limits, now posting XLF as #1 and XLK as #11. This is a very abnormal divergence and although today's modest recovery in MSFT may help to ease the pain the fact remains that SPY is stuck in the #5-7 rankings...... typically a sign of market stagnation or impending reversal.

On the SPY TrendX in the right side panel we note that SPY has reached overhead resistance and the most likely next move would be DOWN.

If you haven't noticed, both gold and silver are now exhibiting soggy bottom patterns and, long overdue for a recovery, may be in line for at least a 10-15% run, especially if equities falter.

NOTE THAT THE P6 has now turned down with a top 2 sort.
We mentioned last week that this occurrence would be the sign for increased caution and position downsizing...a risk management perspective that is re-iterated here.

Click once on chart to clarify.

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