The December to mid-January time frame has produced a number of rather large and tradable tops throughout history; and it is our belief the probability favors just such a top developing given the current overbought momentum readings. That said, we also note that the declining Dow Industrials-Nasdaq Composite Ratio is forming a bullish declining wedge; this is important from the standpoint of "intra-group rotation", for generally this ratio tends to rise as the broader market declines. Hence, the risk-reward dynamic suggests we want to be relative bullish of the more prosaic industrial shares, while being short of technology in a hedged portfolio. Aggressive traders can simply "rotate" into an overweight short position via technology shares.
