Quote from Maverick74:
Going forward, I want to spend more time going over spread markets. Using ACD to locate and execute spread trades with solid edge. Nominal price alone has always been a terrible way to evaluate a given market. Everything must be evaluated relative to something else.
I'm going to give a simple example here. Being long the SPY against a short XLF, the financial ETF. While many are trying to top pick or bottom pick the market, the irony here is that both sides can put on this spread and express two completely different points of view while making the same money. There is two ways to look at this spread. One could say he is expressing his view that the market is going higher led by the large cap stocks. And she can be expressing her view that the market is going lower led by financials. Both have the same trade on, both sitting at or near the high of the year. This is how you find edge. Not by getting short SPY because you think the market is going to zero or getting long SPY because it's a new bull market.