So what does it all mean??
The ratio of two diametrically opposed asset classes often provides insightful clues about what investors are doing.
The XLY:XLP ratio is a perfect example. Its not a hypothetical as it uses real money data based on what investors are DOING and NOT what they maybe thinking or projecting...
XLY represents the Consumer Discretionary Select Sector SPDR .
XLP represents the Consumer Staples Select Sector SPDR .
XLY is the which tracks the consumer
discretionary sector XLY’s top 5 holdings are...
Walt Disney (DIS),
Amazon.com ( AMZN ),
Home Depot ( HD ),
McDonald’s ( MCD ).
XLP tracks the consumer staples sector, with
top holdings of...
Procter & Gamble ( PG ),
Coca-Cola ( KO ),
Philip Morris (PM),
Wal-Mart ( WMT ),
CVS Caremark ( CVS ).
So how does this affect markets?
When the chart value rises its a clear indicator that people are happy to spend freely and without caution, investors will look to increase risk, where as if the value starts to go down and decline, people are spending more on everyday essential items and thus stock markets are in shrinkage, decline and investors are taking LESS risk.
we can clearly see how this chart reflects current highs on the stock indices if we compare to the current S&P500 , Russel, Dow Jones and so on
If this article has helped or you have any further questions, please leave them in the comments below.....
might be good run for the indicies in the coming week