Chart of the Day - Tuesday, February 25, 2025

🏆 Today's Chart of the Day was shared by Ian McMillan (@the_chart_life). 
 

• Consumer Staples ($XLP) advanced for the third straight day, while the S&P 500 ($SPY) declined for the fourth straight day, representing a flight to safety. 
   
• $XLP has outpaced $SPY for five consecutive weeks. Ian points out that the ratio ($XLY/$XLP) is testing a two-year downtrend line. 
   
• When this ratio emerged from a multi-year downtrend in 2018 and 2021, it was an early warning sign to investors. Both scenarios preceded a double-digit decline in the S&P 500. 
   

The Takeaway: Consumer Staples are testing a multi-year downtrend line relative to the S&P 500 ($XLP/$SPY). A breakout would be a red flag for the broader market, while rejection would be considered bullish.