Consumer Staples versus the S&P 500 just hit a 5-month high.
Here’s the chart:
Let's break down what the chart shows:
The chart displays a single black line tracking the relative performance of Consumer Staples vs the S&P 500.
The Takeaway: A 5-month high in Staples versus the S&P 500 is not what an easy market looks like.
Last year, this ratio went straight down because the market rewarded risk everywhere. Growth worked. Beta worked. Defense did not.
That backdrop is now fading.
Staples do not outperform when markets are paying investors to chase growth and beta. They normally start outperforming when the upside becomes less reliable.
This move tells me traders are starting to shift toward safety inside equities.
The January 2025 relative low is the line that matters here. This ratio just broke out above it. That move reflects positioning toward defensive sectors.
This does not mean the market is broken. It means the environment might be changing if we see further follow-through.
This is one of the first bearish data points I have seen in nearly two years that is worth watching closely. Not because it predicts a selloff. But because it signals a change in behavior.
The weight of the evidence still points to a bull market. This is one data point. But it is one that does not usually show up when conditions are easy.
Staples leading does not guarantee a bearish outlook. But it puts one on the table.
This ratio is worth watching moving forward. So, what other bearish data points are you seeing right now?
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