After the close, the Sector Model shows XLF with a lead over XLB. If there is a favorable gap in the morning, I'll make the trade. Otherwise, I'll recalculate before the close.
This is a result of the confirmed end of QE (bearish for XLB) and a reliance on zero interest rate policy going forward (bullish for XLF).
We could say, "Yeah, but we knew that." Yes and no. We all believed this would happen, but the reward on XLB would have been greater with a positive surprise than the risk of a confirmation of what was already anticipated.
In other words, one could lose 3% for being wrong, but gain 7% for being right (in theory). These are the kinds of bets we all have to make in our investing strategies.
Tim
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