Energy/Consumer Discretionary Intermarket Relationship Intact:
Some relationships like in life, as in markets die hard. One was the liaison between the greenback and crude, which used to trade in an inverse fashion. They have both charged higher in recent times. A traditional relationship that has stayed intact is the one with energy and consumer discretionary. As one can see from the chart below comparing the XLE and the XLY they are on the opposite sides of the leaderboard on a YTD basis. The XLE is again the only major S&P sector of 11 in the green, handily so by nearly 40%, and the XLY is in the basement lower by almost the same amount. Making a comeback this week is the XLE up almost% so far after last Friday’s bullish inside session off the round 70 number. Since the week ending 11/26/21 when the XLY recorded a bearish engulfing WEEKLY candle it has gained ground just 9 weeks. Even with recent robust credit card data the relationship remains unbroken.