XLY:XLP Weekly Chart; The Keystone Speculator's Consumer Discretionary to Staples Ratio Stock Market Indicator

The XLY to XLP ratio helps assess the feel of the stock market and whether the vibe is leaning bullish for the intermediate and long-term ahead (week, months, years) or bearish. Use the 100-week MA as the demarcation line. When the ratio is above, the wine is flowing like water, the one-half of America that owns stocks are celebrating rising equity prices and people in general are spending money and having fun. Consumer discretionary (expensive watches and jewelry, furs, sports cars, luxury goods, Amazoning, etc....) outperforms consumer staples (toothpaste, toilet paper, hygiene products, cereal, Coke, etc...).

When times get tough, folks shun the party atmosphere and instead buckle down and pinch pennies. They focus on the key consumer staples they need for the family and delay any big ticket or fun purchases. In a recession or slow economy, no one is smiling.

For the last two years, it is all bullish joy. Then the Q4 2018 -20% crash occurs in the SPX. The chart above gaps down on the weekly basis and price is now working its way back up to fill that gap. The ratio bounced off the 100-week MA. Keep an eye on it. When the ratio slips below the 100-week, you will know that all hope is lost. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.