Did you know this about XRT and TLT?

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August 16, 2020

Mish's Daily

By Geoff Bysshe


blankAs the S&P 500 struggles to rise a fraction of a percentage point to be able to achieve the status of reclaiming its February all-time high level…

Imagine you could go back to February 19th 2020.

The SPY has just closed at a new all-time high, and news of the COVID-19 virus causing havoc in China is in the headlines, but this time…

You know that a pandemic will soon cripple the U.S. economy and crash the stock market from its peak to down over 30% faster than any other time in history.

You also know the market will recover quicker than anyone expects led by technology companies that will find a silver lining in the chaos and provide the same for their shareholders.

Knowing that sliver of the future, you’re asked…

Which ETF will make you the best return from then (February 19th) to now, the time when the SPY returns to its February levels?

You must choose between XRT or QQQ.

First, I have to give a big “thank you” to Stock Charts, which made it so easy for me to provide you with these charts.

Note, I added the tickers to the chart’s bars to make it quicker to read.

As you can see from the charts below, Grandma Retail (XRT) has some real fight in her!

I’d call it a tie.

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Here’s a different view of the same group of symbols over the same time frame so you can see their journey.

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Now let’s do the same exercise, but starting from the March 23rd low in the SPY…

The low was created by the Fed’s announcement that it will do whatever it takes to stabilize the bond markets, including buying corporate bonds at every grade (all way down to Junk!).

From the chart above, you already know XRT has kept up with the QQQ, and crushed the SPY since February.

And you know that since February the banks (KRE) have been the worst performer.

That said…

Which ETF will do better from the lows, bonds (TLT) or the banks (KRE)?

The answer is below…

I’ll leave the analysis and the “why?” up to you, so as not to cloud this simple message, which is also the theme of this week’s Market Outlook…

If you want to follow the market, sometimes you need to remember not to let what logic get in the way of reality.

As traders, we have several ways of saying this. For example…

Trade what you see, not what you think.

Here’s a look at how the same group of symbols from above have moved since the SPY low. Note the color of the lines and bars are not the same in these charts as the ones above.

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Here’s the same data with an easier way to see the end result.

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If you’d like to make your own charts like these, here’s a link to this list of symbols in the StockCharts’ default view and time frame (200 days). You can change the time frame by clicking on the slider’s number of days at the bottom right and the chart type with the icons at the bottom left.

https://stockcharts.com/freecharts/perf.php?KRE,IWM,IYT,SPY,TLT,XRT,IBB,SMH,QQQ,GLD&n=95&O=111010

Let me know what you think of all this in comments section below.

Best wishes for your trading,

Geoff Bysshe
President
MarketGauge.com

(Geoff is filling for Mish until August 31st)


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S&P 500 (SPY) Double Doji pattern within Wednesday’s range. Be cautious under 332. Watch 330 as important support

Russell 2000 (IWM) Double inside day pattern broke the pattern low and recovered. Key level to break above is 158, the160 is  resistance area and 153 key support.

Dow (DIA) Third consolidation day. 270 now pivotal support

Nasdaq (QQQ) Consolidation day sitting on the 10 DMA. 275 is the all-time high level to break.  260 is key support level and a trendline.

TLT (iShares 20+ Year Treasuries) Weak day new closing low, and closed at the low of the day. 162 next big support.

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4 Comments

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    Pa Mikos

    Very neat I could not get 200day I was working with free 254 days past year 6 mon. 127days 3 mon. 65 days 1 mon. 24days 1wk 6 days. Any way for past 6 mon. GLD QQQ XRT the best DJTA IWM KRE the worst. At 3 mon. past XRT DJTA IWM the best GLD IBB TLT the worst! 1mon. XRT DJTA KRE the best QQQ IBB TLT the worst. Finally the past week DJTA KRE XRT the best IBB TLT GLD the worst. Ok now what to do with this info! I would divide them them into the top 3 middle 3 bottom 4. . My idea (after watching of Keith's videos rotation) watch for what for what they are rotating into using the weekly and monthly data , looking to enter the middle 3 moving into the top 3.

    It appears when they lead for 6mon. they start to rotate out from this small sample size.

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      Geoff Bysshe

      Hi Pa,
      I do have a Stock Charts membership. Are you saying that the free version doesn't enable you to choose your time frame to as precisely?

      Geoff

      - Reply
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    Pa Mikos

    yes

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      Geoff Bysshe

      ok thanks for letting me know. So then are you requesting a 6 month view? I liked your thought process.

      - Reply

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