Monday, January 01, 2007

Tech Ratio: A $XCI vs. $DJUSTC Comparison

Hi Brett:

Intrigued by your use of $XCI, I plugged it in to both 7-year and 12-month versions of the Tech Ratio. The charts have similarities of course, but more importantly show noticeable differences.

Below are the two 7-year versions for comparison. It's curious that XCI held out longer in the 2000 correction, and didn't actually capitulate until 2003. Interestingly, this is also the moment that the DJUSTC finally diverged from the NASDAQ, heading lower as the NASDAQ improved.

The chart also shows that the XCI ratio really hit the skids in Jan 2006, bounced hard last summer, and then has had a weak 2007, much weaker in fact than the more broad-based DJUSTC ratio. This suggests that hard-core, computer-related technology is currently the weakest of weak. It's also more volatile, and has the ability to spring back quickly.

Image Hosted by
Image Hosted by

Here are the two 12-month ratios for comparison. The relative weakness of the XCI ratio with the DJUSTC version is clear, but also shows that both charts may have put in a constructive higher-low, double-bottom this spring. That said, both of these charts have a lot of work still ahead before they are sending clear Buy signals. Let's hope the INTC strength - and that of AAPL, AMZN and others -- is a sign of better times ahead.



Image Hosted by
Image Hosted by

No comments: