Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Will This Consumer Trend Turn Bearish For The Stock Market?

Published 12/14/2021, 10:52 AM
Updated 07/09/2023, 06:31 AM
IYC
-
IECS
-

It sounds a bit funny, but it’s very accurate: consumer behavior can tell you a lot about the stock market, especially when comparing buying discretionary items against buying everyday staples items.

In today’s chart, we look at the long-term performance ratio of the U.S. Consumer Discretionary ETF (NYSE:IYC) to the U.S. Consumer Staples ETF (NYSE:IECS.)

When discretionary spending is outperforming, this ratio is headed higher and indicative of consumers being more willing to spend money (risk-on).Discretionary/Staples Ratio Monthly Chart.

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.

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

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.