The ratio between the Nasdaq 100 and and Dow Jones Industrial Average is hovering near its highest level since the Dot-Com boom peak in May 2000. Given that these two indices enjoy an incredibly high, positive correlation between them, the relative aspect here speaks to something more speculative in nature.
I believe risk taking has been driven by artificial factors like stimulus, which also explains why we have leveled out on the ratio rather than run straight up and straight down into reversal. However, that would suggest that the onus of reversal is ahead of us as the major central banks talk tapering and rate hikes.
I'll be ready to take advantage of any systemic sweep in risk assets and this will be one of my go-to signals.
I believe risk taking has been driven by artificial factors like stimulus, which also explains why we have leveled out on the ratio rather than run straight up and straight down into reversal. However, that would suggest that the onus of reversal is ahead of us as the major central banks talk tapering and rate hikes.
I'll be ready to take advantage of any systemic sweep in risk assets and this will be one of my go-to signals.