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The Magic Ratio

12/28/2015

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I discovered the magic ratio a while ago and have been keeping tabs on this chart for quite some time now.
This chart is the key to markets. Look how the chart has progressed throughout the year. 
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There are several key developments to this chart. 
+The first thing of note is when the ratio topped out July, 2014: When the Dollar began outperforming equities.
    -To be clear, the Dollar is up an astonishing 23% where as Equities are up a meager 3% in the time since.
+The ratio weakened until a new major downtrend was established with cross of the 200 & 550dma. 
+In August, the trend of USD:Equity outperformance was confirmed when equities crashed. 
+The dead-cat bounce in stocks post-crash was stopped dead in it's tracks when the magic ratio retested it's 200dma.
Recently the ratio found resistance, this time at it's 50dma.
I speculate that the magic ratio will soon flex it's muscle again and we see a big up-move in the dollar, down-move in equities, or both...

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    R. J. Sullivan IV

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