On Friday there was a double breakout in the S&P 500 — a breakout in the index itself, and a new high in the ratio between the consumer discretionary and consumer staples sub-indices (as represented by the ETF’s — sadly I don’t have access to the actual indices). Historically this has been an excellent signal, and it is one I have recently neglected. This has been a mistake, and the time to rectify a mistake is now, so I have bought the latest signal. It is risky to buy after equities have had so strong a run, but I expect the trend to remain upwards for now even if I am stopped out by a short-term pullback.
The chart shows the S&P 500 in the top middle panel and the ratio (with double-breakouts highlighted in red) in the lower panel. I should have taken the signal at the start of January, but was not focussed on this indicator.
As the futures are down this morning I have been able to get into the IG Index market, which is an amalgam of the futures and cash markets, below the close of the breakout day.