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.