jangseohee
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Back to Maslow's Most Basic Need

XLP/XLY  
XLP/XLY  
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Maslow's hierarchy of needs are categorized into five levels, Physiological needs, Safety needs, Love and belonging, Esteem & Self-actualization.

From the above chart, XLP/XLY = the ratio of Consumer Staples/Consumer Discretionary, we can see that when the market is souring(simultaneously ratio is getting bigger), human being tends to have preference towards basic foods , drinks, houses & etc for security which coincide with Maslow's most important physiological needs which corresponds to XLP/XLY ratio hitting as high as 1.2-1.35
Conversely, when market is doing very well, XLY stocks are much preferred causing the ratio to be as low as 0.65

The last two max ratio was in 2001 and 2008. my projection for next max ratio is around 2017.

Though 2008 economic crisis was considered one of the worst, but the lowest XLP/XLY ratio is 0.65 while the lowest current ratio is 0.63. We were even more complacent recently :-), As a consequence, i project that the next market bottom will see this ratio hitting as high as 1.4-1.5, no?

After showing a monthly bullish divergence , i am seeing the slow uptrend already.

P.S. Base on the ratio, it only means that during market crash, XLP stocks drop lesser compare to XLY stocks.





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