A very good, bullish observation from Waverly Advisors on a “trusty” market indicator suggesting ongoing market strength.
“Historically, the Discretionary/Staples spread has rallied with the broad market; in other words, it is not a leading indicator on rallies. However, it has also historically faltered before major indexes, making it a useful timing indicator and an early warning of trend failure. we see no weakness in this spread at this time.”
Note that the Orange line represents 20 period average of the spread. Outer bands set at +/- 2.5 standard deviations.
Click to enlarge
Photo: Waverly Advsors