The past year has been characterized by a rotation among sectors; lockdown vs. opening.  Spending spree vs hoarding (case in point: toilet paper). So what do we make of the fact that consumer staples are still underperforming, even as the Delta variant seemingly curtails discretionary spending such as travel and leisure?  

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Staples are making new multi-decade lows relative to the S&P 500 (SPY) and are on the brink of a catastrophic breakdown relative to consumer discretionary stocks:

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These are all characteristics of an environment where stocks should perform well.

It’s when staples catch a bid relative to other stocks that we tend to see a problem.

Meanwhile, a lot of investors are asking me whether or not stocks will correct.

May I remind you: The majority of stocks have been in a correction for most of 2021, with just a handful of stocks doing well

The two below have been consistently leading indicators for the overall market.

We lean on these for information.

The way I see it, if these two can get going, there are few things more bullish for the equities market:

I continue to point to the one below as arguably the most important chart in the world:

An upside resolution here will likely tell us a lot about the strength of stocks this Fall. 

If the US 10 Year Yield can get back above 1.4% and stay there, that would likely be a positive for small caps and bank stocks, two big keys to a bull market.

I think the one below is the final piece to that puzzle.

This is one of the seasons that the Options360 Concierge Trading Service added a bullish position in the Russel 2000 (IWM). if rates start rising, banks will begin lending, which in turn, will spur economic growth among smaller, more cyclical stocks.

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