XLP/SPY indicates probability for a move to the upside higher

Aug 30, 2022

Idea is based on the XLP/SPY chart using the inverted relationship between them. Since we have just made a strong move to the upside in XLP/SPY during the latest bear market, price has extended well above the 50 MA, a retracement towards it is warranted and leads to the SPY moving higher historically. The probability for a move to the upside at least in the short term is therefore higher! If we drop below the 50 MA and close back above it on the weekly chart, that would be an excellent place to short the SPY again! However, if we break below it and continue to the downside, then expect continuation to all time high.