From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge
One of the main themes we discussed in the Q3 Playbook we published last week is the lack of any directional bias for equities on a relative basis.
We’ve been obnoxious about the trendless environment for equities on an absolute basis… and now we’re noticing a lot of the same play out in many of the relative trends we monitor.
When there is no edge on absolute terms, we can at least try and generate alpha by taking advantage of relative trends through pair trades.
But, right now there’s really nothing out there giving us an opportunity to do so. This is about as rough of an environment for money managers as you’ll find.
All we see is sideways, sloppy, range-bound action… Standard year-two stuff!
To illustrate what we mean, let’s take a look at each large-cap sector SPDR relative to the S&P.