Two key risk ratios just hit extremes: Consumer Staples has broken to fresh lows against the S&P 500, while Equal-Weight Discretionary has hit record highs relative to Staples.
Here is the chart:
Let's break down what the chart shows:
The top panel shows the relative ratio of Consumer Staples vs. S&P 500 in blue.
The bottom panel shows the relative ratio of Equal-Weight Consumer Discretionary vs. Equal-Weight Consumer Staples in black.
The Takeaway: Together, these two ratios are one of the cleanest risk barometers for equities.
Staples vs. the S&P 500 sinking to all-time lows confirms investors have no appetite for safety.
Discretionary vs. Staples breaking to new highs shows the opposite — broad demand for offense and growth.
Staples’ weakness is part of a multi-year downtrend, not a one-off slip. Discretionary’s breakout comes from a six-month base, the kind of setup that usually carries persistence.
This is a textbook signature of a risk-on market.
Defense is being sold.
Offense is being bought.
There’s no bearish message here. As long as these ratios hold their breakout levels— offense pressing higher, defense rolling lower — the bull has fuel.
The only question is how much further offense can stretch before it needs a breather.
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