The XLV/SPY Ratio is a bear market indicator when rising
The XLV/SPY ratio pits a more defensive, more cyclically insulated sector vs. the broad US market. Its defensive characteristics tend to see it be less bearish during bear markets.
The left side is the daily chart, showing the pattern we noted earlier in the year. If a bear market were in the offing, that would turn out to be a low. Well, it was a low prior to a harsh bearish correction (currently in play) or something more, a real bear market out ahead (don’t listen to media going on about “it’s a bear market because it’s down 20%”, because a real bear would eventually take it down much further).
The right side of the chart is the long-term view, where this ratio rose in the 2001+ bear, the 2007+ bear, the 2020 crash before an inflated market recovery, and the 2022 bear (that wasn’t; it was a correction). The green phase was an outlier, as if you will recall, Healthcare was heavily influenced by politics back in 2012-2016. There was some market volatility during those times, but it was generally bullish.
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