As we close the books on 2011 it’s now time to turn our attention to the fist quarter and what winter has in store for markets.
I believe we are on the cusp of a major turning point, and that markets will definitively trend (either up or down) in the next few months in what I am calling the Winter Resolution of 2012.
I say this because of the length of time defensive sectors have held up relative to broader market averages, which means that the incredible tension between bulls and bears can not persist for much longer.
One side will finally dominate the other.
Take a look below at the price ratio of the iShares Dow Jones Utilities (NYSEArca: IDU) relative to the iShares S&P 500 (NYSEArca: IVV). As a reminder, a rising price ratio means the numerator/IDU is outperforming (up more/down less) the denominator/IVV.