Consumer Staples (usually a defensive investment) are taking precedence over Consumer Discretionary (usually aggressive posture, when all is well) in October. We are pressing lower and showing the largest drop in a while. This is potentially a leading indicator of some kind of slowdown coming.
Well , we broke the highs in this pair. This shows that investors still think that the dip was as its called , a dip. I will be watching the first zone demarcated by the rectangle. That's the floor and should hold, if not , We are in for a rough ride.
A brief recap:
XLY is consumer discretionary sector = investor shift to luxury but not necessary things = risk appetite increase
XLP is consumer staples sector = investor shift to more basic needs = risk appetite decrease (more security)
As a recent spat of rally, i have noticed that there is a sector rotation play into XLP. As a result, the ratio XLY/XLP is...
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...
A great indicator to determine the confidence (ie. risk appetite) of investors/speculators is the XLY/XLP ratio. XLY is the ETF for consumer discretionary stocks whereas XLP is the ETF for constumer staples stocks. In times of confidence, XLY should perform better than XLP because there is belief that the economy is doing well and that people will spend cash on...
Long Consumer Staples, Short Consumer Discretionary
A defensive pair for major market correction at historical low level.
The pair is breaking out from a four months correction.
Expecting it to run back to 0.7, indirectly hinting for a potential S&P correction is coming.