Will This Consumer Trend Turn Bearish For The Stock Market?

Sharing is Caring!

by Kimble Charting

Consumer behavior can tell you a lot about the stock market.

Sounds a bit funny, but it’s very true. And especially so when comparing buying of discretionary items versus buying of everyday staples items.

In today’s chart, we look at the long-term performance ratio of the Consumer Discretionary ETF (XLY) to the Consumer Staples ETF (XLP). When discretionary spending is out-performing, this ratio is headed higher and indicative of consumers being more willing to spend money (risk-on).

See also  H8 data update. There are indicators that preface some of the market crashes and major market events...

As you can see, the longer-term trend has been higher confirming a bullish trend (for the ratio, and the stock market). This is highlighted by the rising price channel at each (1).

BUT the ratio has turned sharply lower this month after testing the upper end of the price channel. It is now attempting a bearish reversal.

See also  Jim Rogers 2022- The Worst Bear Market is Coming

The decline currently has the ratio testing its up-trend line at (2). If support breaks at (2), it would send a bearish message to investors. Stay tuned!

This article was first published in See It Markets.com. To see the original post CLICK HERE.

 

 

450 views

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.