Joined Dec 4, 2012
319 Blog Posts

Why SPLV/SPHB Matters?

For those that are not aware we write a daily column called Morning Matters. It is published each day in Super Stock Investor (www.superstockinvestor.com) along with Market Matters, Articles That Matter and the Stock Scorecard. Best of all it is free and all you have to do is sign up and it is delivered each day at 8:00 a.m. EDT each day.  Why do we mention it? Because this morning we wrote an important article we wanted to share.  Here You Go:

Our tracking of High Beta to Low Volatility and Large Cap to Small Cap shows both High Beta and Small Cap lagging. If this trend continues, then it is almost a guarantee of a correction.

We track the Powershares S&P High Beta (SPHB) versus Powershares S&P Low Volatility (SPLV). SPHB is down on an absolute and relative basis since mid March.

[Image 1]

Meanwhile, the iShares Russell 2000 (IWM) is lagging the SPDRS Trust Unit (SPY) that tracks the S&P 500.

[Image 2]

Even though the headlines were the market was higher, the IWM was lower by -0.62% after dropping -1.34% on Monday. Follow this trend closely.

A smart trader will always want to track high beta versus low volatility. It tells him when to put the pedal to the metal.



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