Market Insight

LQD Gap Indicator Supports Hedging Long Stock Positions

Our gap indicator showing the divergence between a ratio of LQD/SPX and its moving average, has expanded further below the moving average line.  See the chart below.

LQD010318

Such gaps tend to proceed a bit of profit taking in the S&P 500 (see the red dotted lines).  Interesting to note also the green dotted lines, whereby the gap is recovered (or there is a gap ABOVE the moving average), signaling a good time to be long.

Today's reading suggests that hedging long positions is in order.

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