Large and in Charge

Stock quotes in this article: SPY  

But let's also look at the really long-term picture of this spread. This next chart below shows the cash S&P 500 divided by the cash Russell 2000 index over the past 20 years.

S&P 500 vs. Russell 2000
Past 20 years
Click here for larger image.
Source: CQG

For the fourth time since 1988, this spread has bottomed somewhere around the 1.75 ratio price. So in the grander scheme of things, I'm very comfortable being long the other 50% of this trade down from where we are (just about 1.75.) This may prove to be a multiyear low, and well worth hanging onto for a major move higher over the next couple of years. And if you're not in this spread yet, you might want to think about using a pullback to get long it.

Viva la large-caps!

Know what you own: Bensignor mentions the major indices. ETFs that track major indices include ProShares Ultra Dow 30 (DDM Quote), ProShares Ultra S&P500 (SSO Quote), ProShares Ultra QQQ (QLD Quote), Diamonds Trust (DIA Quote) and ProShares QQQ Trust (QQQQ Quote).

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At the time of publication, Bensignor was long SPY in his own account.

Rick Bensignor is president and chief strategist at Bensignor Strategies, a technical trading advisory firm. The corporation provides macro and micro technical and behavioral perspective across all asset classes, including on-the-fly analysis in real time. Rick was previously chief market strategist at Morgan Stanley Principal Strategies, responsible for providing the firm's proprietary traders with strategic investment and tactical trading ideas. Prior to that, he was the corporation's Institutional Investor-ranked chief technical strategist, overseeing the firm's banner technical research product. He was formerly the head of technical analysis, futures and commodities at Bloomberg, where he was responsible for the product development, sales and marketing of those applications. Before that, he was Morgan Stanley's commodities technical strategist and head of the Institutional Commodities Sales Desk, which followed his 14-year trading career as a broker and independent trader on the floor of several New York futures exchanges.

In addition, Bensignor was an adjunct professor at New York University's School of Professional and Continuing Studies as well as the New York Institute of Finance, where he taught technical analysis and trading courses for five years. He wrote the book New Thinking in Technical Analysis: Trading Models from the Masters, and contributed the chapter on futures for Investor's Business Daily Guide to the Markets, and has written several articles in the Bloomberg magazine. He appears regularly on financial news television, and is often quoted in major global financial media.





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