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Restaurant sector underperformance update

September 29, 2014

In March, I closed a short position in the S&P Restaurants Index versus the S&P 500 Index, following a bullish daily RSI divergence.

S&P Restaurants Index versus S&P 500 Index


  • The divergence unwound for four months, then the long term sector rotation continued – the underperformance resumed
  • Another bullish RSI divergence was formed on 18 September, marking a low

Weekly chart


  • The daily RSI divergence coincided with the weekly RSI being oversold
  • There is no MACD divergence, so no specific reason to think that the underperformance is over


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