Money Control Place
  • Politics
  • Business
  • Stocks
  • Investing
  • Politics
  • Business
  • Stocks
  • Investing

Money Control Place

Stocks

The Top is Confirmed and Now It’s Just a Matter of How Low We Go

by admin February 24, 2025
February 24, 2025
The Top is Confirmed and Now It’s Just a Matter of How Low We Go

Let me start by reminding everyone that I believe the most important relationship in the stock market is how consumer discretionary stocks (XLY) perform relative to consumer staples stocks (XLP). This ratio (XLY:XLP) has a VERY strong positive correlation with the S&P 500. In other words, when the S&P 500 advances, a corresponding rise in the XLY:XLP ratio is to be expected. When it doesn’t rise to corroborate the benchmark’s rally, it typically leads to lack of S&P 500 follow through.

I’ll show you visually what this positive correlation looks like since the turn of the century:

From this chart alone, it’s clear that what happens to consumer stocks, and their relationship to one another, really matters in the grand scheme of things.

Now let’s look at an intraday chart of the XLY and XLP from last week:

The top panel is the XLY and the bottom panel is the XLP. Does anything seem odd to you? Well, for me, the action on Friday and the disparity between the performance of both consumer stock groups really stands out. And when I did some research, I found that this type of disparity where the XLY underperforms the XLP by such a large margin has occurred only 10 times since the financial-crisis-related bear market that ended in March 2009. 8 of those times happened during bear markets and 1 happened during a correction. Friday was the 10th. This type of massive rotation from offense to defense should not be overlooked.

In early January 2025, I hosted our MarketVision 2025 event. At that time, I indicated that we were set up for a challenging Q1 and a potential market correction and, on Friday, we got confirmation. I expect we’re going to see much more selling in the coming weeks.

But how much? I plan to discuss that in my next free EB Digest article on Monday. To start your FREE subscription (no credit card required), CLICK HERE and join tens of thousands of other like-minded traders and investors, and find out what to expect over the balance of Q1.

Happy trading!

Tom

0
FacebookTwitterGoogle +Pinterest
previous post
PDAC Presentation
next post
Apple boosts U.S. investment plans with $500 billion pledge amid Trump tariff threat

Related Posts

Equities Are Not the Place to be as...

April 21, 2025

Major Indexes Have Reached Bull Market Perticipation Levels

June 15, 2023

Sector Spotlight: Sector Rotation Sends Mixed Signals

September 27, 2023

Is Gold Headed for New, All-Time Highs?

July 28, 2023

Jesse Livermore on Mistakes & Rising From the...

September 21, 2023

Stocks Selloff into Close After Failing at Resistance

August 9, 2023

Semiconductors are at CRITICAL Level!

April 18, 2024

Intermediate-Term Participation Levels Are Very Overbought, and They...

December 28, 2023

Week Ahead: NIFTY Set To Stay In A...

July 5, 2025

Small Cap Value Stocks Unexpected Driver for Market

June 29, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Breakout Watch: One Stock in Each Sector to Watch Now

    • Small Caps Are Rotating In — Here’s Why It Matters

    • Want Faster, Lower Risk Trades? Use This Setup

    • The Seasonality Trend Driving XLK and XLI to New Highs

    • Copper Soars to All-time High as Trump Unveils 50 Percent Tariff on Imports

    • Apollo Silver; Right Assets, Right Management and Right Time

    Categories

    • Business (1,283)
    • Investing (2,658)
    • Politics (3,699)
    • Stocks (1,709)
    • Uncategorized (20)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: MoneyControlPlace.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 moneycontrolplace.com | All Rights Reserved