The EW Consumer Discretionary to Consumer Staples ratio can provide insight into the specific stocks that are driving equity outperformance. Typically, in "risk on" regimes the Discretionary sector will outperform the Staples sector. Conversely, when investors get "defensive" Staples will tend to attract a greater share.
Here, we see that this Relative Strength ratio is actually BELOW the levels experienced in January 2018. Early 2018 was a fairly bullish time in the stock market, and serves as a good gauge or proxy of "risk on" behavior. The "gap" observed here by $SPY performance (in red) versus the EW Consumer Sectors ratio seems to support the view that investors are not really getting overly "aggressive" here. Watch sentiment closely.
Here, we see that this Relative Strength ratio is actually BELOW the levels experienced in January 2018. Early 2018 was a fairly bullish time in the stock market, and serves as a good gauge or proxy of "risk on" behavior. The "gap" observed here by $SPY performance (in red) versus the EW Consumer Sectors ratio seems to support the view that investors are not really getting overly "aggressive" here. Watch sentiment closely.