captain_smollett

XBI vs SPY: a tight relationship as a bull/bear indicator

AMEX:SPY   SPDR S&P 500
Since VIX             has been updating the lowest values ever and Gold             value has been growing alongside the markets and sometimes even correlated with the US Dollar             , traders were trying to find a valid bull-bear indicator that could show an approximate top of the historical rally on Equities.

In my opinion, DXY             is a very valid indicator but there are more instruments that show a high level of correlation with the market and can be followed. One of them is a highly speculative Biotech index             .

Notice, while the market is running in a perfect bull trend, Biotech are in a correction after a massive dump in 2015-2016. In my opinion, Biotech has topped back in 2015 and a new massive decline can be closely monitored to determine the whole market´s top.

The specilative instruments are normally the first to fall as their growth is commonly built by hot money that rush into a same small door once any sort of a real danger appear. Obviously, one cannot fully relay on the speculators only as we all know how quick they can be on restoring their positions. But if a joint analysis will show a real bear at some point of time, speculative instruments decline should confirm a change in the trend.
Kommentar: SPY and specially Nasdaq currently diverge from the XBI fund. Lets see if it works as a signal
Kommentar: If everything goes well, Biotech is almost at the target
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