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These Unusual Relationships Might Signal the Next Market Turn

by | Oct 26, 2023

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Is there anything left to hate in the Consumer Staples sector, tracked by the XLP ETF?

The percentage of stocks above their 50-day moving averages is practically nil.

Consumer Staples sector 50-day moving average

The same is true for the 200-day.

Consumer Staples sector 200-day moving average

Now check out that flat line on the bottom right of the Utilities sector (XLU)… That’s the percentage of stocks above their 200-day moving averages.

Utilities sector 200-day moving average

Looking at the percentage of stocks at 52-week highs, we get a different perspective, comparatively.

The XLP and XLU have perked up. In fact, they’re outshining the S&P 500 (SPY).

XLP and XLU compared to the S&P 500

Source for all charts above: BespokePremium

Interestingly, the percentage high shown for the S&P 500 above coincides with the SPY ETF’s price high for the year.

If the relationship between the percentage making highs and the overall price action of the S&P 500 is to remain, then a higher swing high in the percentage making highs might indicate the end of the current pullback. 

At a minimum, it’s something to consider.

What has me concerned regarding the S&P 500 is the risky area between a head-and-shoulders pattern and the year open. They are oh so close together… The fact that the S&P 500 took a power-turn down at the 200-day moving average Wednesday adds fuel to the fire.

S&P 500 stock chart

Oh, I get it. It’s earning season, and the behemoth sector, Technology (XLK), is having some issues. This in turn is causing the issues in the S&P 500…

Well, downturns must start somehow, and a lot of eggs in one basket has historically caused issues.

Here is how the baskets are stacking up:

sector comparison

Source: BespokePremium

I’m not saying it’s time to ditch the S&P 500 or Tech sector, but it is time to be aware of other sometimes hidden and extremely hated components that contribute to this crazy market we trade.

Could traders start to hate the SPY and XLK more than they hate other sectors? What will happen if they do?

Think and win!

Celeste Lindman
Celeste Lindman Trading

If you haven’t already, join my Telegram channel here for frequent trading insights and market musings!

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

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WRITTEN BY<br>Celeste Lindman

Celeste Lindman

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