Following the summer crash in stock exchange traded funds and fall melt-up, I’ve been writing about the idea that we could be entering a “winter resolution,” which is an environment characterized by lower correlations/volatility and a trend (up).
Every day continues to confirm this as markets climb an icy wall of worry despite continued skepticism by the investing community. [Winter Resolution of 2012]
If indeed the bull is back and 2012 becomes the year of reflation, I don’t think the way to approach markets is to go with prior market leaders.
On the contrary, this is the exact kind of environment where new leaders emerge.
What could be one of those leaders? Take a look below at the price ratio of the Global X Uranium ETF (URA) relative to the iShares S&P 500 (IVV). As a reminder, a rising price ratio means the numerator/URA is outperforming (up more/down less) the denominator/IVV.