While staples strength is not always a guarantee of looming market weakness, it is worth noting that XLP and VDC are each up 1.5% this month compared to a 1.2% gain for the S&P 500. That is relevant because XLP is historically one of the worst-performing SPDRs in March. [Ides of March for Staples ETFs]
Also worth noting is XLP’s out-performance of the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) since the start of March. The staples ETF has been twice as strong as its discretionary counterpart, an important scenario to monitor as well because the XLY/XLP ratio is used by some traders as a gauge of overall market health. [Discretionary, Staples Divergence a Positive Sign]
The good news is XLY has consistently outperformed XLP in recent months, indicating the XLY/XLP ratio’s bullish trend is still in tact.
Consumer Staples Select Sector SPDR
