Based on the idea that the stock market’s actions speak louder than those warning about an economic slowdown, the consumer-led recession many have been calling for appears to have ended months ago.
A relative-strength chart maps how one charted instrument performs against another. On that basis, the Consumer Discretionary Select Sector SPDR exchange-traded fund XLY has been outperforming the S&P S&P 500 ETF SPY since the end of last year, enough to suggest a new uptrend started this past week. The better-than-expected government retail sales report on Thursday was a fundamental confirmation of what the charts have been saying.
“The market is acting like the recession has already happened, and we’ve entered the recovery,” said Craig Johnson, chief market technician at Piper Sandler. “The consumer sector historically does very well coming off of bear market lows.”