The Best Stock Market Ratio
August 5, 2022
One thing I've learned by following this ratio for most of my career is that it often leads.
You tend to see Staples start to outperform Discretionaries before the major indexes peak. And then near important lows, you'll often see Discretionaries start to outperform before the indexes bottom.
The peaks and troughs are often simultaneous as well, so we're always open to both outcomes.
But this ratio did peak 6 weeks before the S&P500 last year, for example.
And regardless, leading or coincidence, both are reasons to follow this ratio closely.
I like to plot it using the $XLY and $XLP ETFs just to keep it simple.
What do you got?
A better ratio?
JC