Chart of the Day - Thursday, October 5, 2023

Today’s Chart of the Day was shared by Eric Conrads (@conradseric). Today was the worst day for the Consumer Staples sector since January, with $XLP dropping -1.97%. Meanwhile, the Consumer Discretionary($XLY) has held up relatively well since the S&P 500 peaked in late July. As a result, the Discretionary/Staples ratio ($XLY/$XLP in red) is flirting with new 52-week highs. Eric points out that this risk gauge is calling B.S. on the pullback in the S&P 500 (blue). It’s easy to doubt this ratio’s bullish message because the denominator ($XLP) is seemingly reacting to higher yields right now, but… is this time really different?