Still, it could serve investors well to at the very least monitor ensuing developments with XLP and XLY.
“Back in 2007 the ratio started heading sharply higher, when it did, the risk off trade was the place to be.
At this time the ratio is NOT looking like a ‘hockey stick pattern’ as it did back in 2007. If it starts turning sharply higher and the S&P 500 breaks weekly support line, it would appear that the risk off trade is on,” adds Kimble.
XLP/XLY Ratio
Chart Courtesy: Kimble Charting Solutions