Stocks Won't Collapse If This Happens

JC Parets
October 19, 2021

Now for the risk on developments that we've seen in recent weeks. As you can see here Consumer Discretionary stocks are breaking out relative to Consumer Staples.

If there is one cheat code in the stock market, this may be it.

The bottom line is this: if Discretionary is outperforming Staples, shorting stocks is not the best of strategies:

This thing has been consolidating for most of the year, as have most stocks in the market. So if you want to describe the way the stock market has performed in 2021, this is probably one of the better visuals to tell that story.

If you think the stock market is about to completely fall apart, the bet I will make you right here right now is that it's not going to do that with the XLY/XLP ratio above its early 2021 highs.

You're welcome to come call me out. You're welcome to troll me as much as you want. Go ahead.

The deal I will make you is this: The stock market is NOT going to collapse if this ratio is above 2.60.

If it does then I'll personally buy you dinner.

Do we have a deal?

JC

 

 

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