Friday, November 21, 2008

Three Market Relationships

Here are a few relationships that have been on my radar:

1) Gold, unlike other commodities, has been performing well relative to stocks (top chart). Should we see a weakening of the U.S. dollar, this could get interesting.

2) Banks have resumed underperforming stocks overall. The reversal by Treasury, deciding to not use TARP to rid banks of their bad debt as was first planned, has been one catalyst in the banks' swoon.

3) Consumer discretionary stocks continue to greatly underperform consumer staples issues, in a classic recessionary relationship.

Many good trade ideas follow, not just what is moving, but what is moving relative to other things.

1 comment:

Contrarian Profits said...

The government is printing money so fast that even cash isn’t a safe bet any more, says Daniel Zurbr├╝gg. And even though gold has slumped during this crisis, the long-term outlook for gold investing remains attractive. Once institutional investors stop dumping gold holdings and the US dollar rally stalls, Daniel says gold will zoom back up to $1,000 an ounce and beyond.