The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite keep making new all-time highs. So do you still believe in this Bull Market??? If you do, well…you should because we still are making higher highs vs. lower lows. But I want to give you some food for thought to be careful.
Consumer discretionary to technology, cyclical stocks that typically associated with bull markets while in down turns or bear markets, consumer staples typically outperform. However, both consumer discretionary and consumer staples sector are at all time highs…TOGETHER…HOW CAN THIS BE???
Consumer Discretionary Select Sector SPDR (ETF), XLY
Consumer Staples Select Sector SPDR (ETF) , XLP
With the US equity markets, consumer staples and consumer discretionary all all-time highs, something has to give because based on intermarket correlations, this doesn't make any sense. This is when one has to dig a bit deeper.
The consumer discretionary sector has consistently lagged the consumer staples sector ever since last year.
For the bull market to continue to run, the discretionary sector must eventually outrun the staples or at some point we will see the equity markets start making lower highs, then lower lows.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.