I have spent the past couple of months debunking posts on bubbles. I said that all the data showed the exact opposite, a healthy bull market. I also said I would write if I saw something different in the data.
There are a few developments which should garner our attention. None of them are loud. None of these them headline driven. But together, they raise a question about the underlying health of the market.
\*Strength in Consumer Staples\*- In a healthy bull market there’s practically no demand for consumer staple stocks. These are the products people buy regardless. Toilet paper, toothpaste, laundry detergents, cigarettes. The basics.
Last year, the Consumer Staples Select Sector SPDR ETF (XLP) returned just 1.5%, compared to a 17.7% gain for the S&P 500.
So far, in 2026, the script has flipped. Consumer staples are already up 6.5% year to date, while the S&P 500 is up just 1.5%.
Compared to financials it looks worse. We don’t have bull markets without financials. When I see financials sitting at the bottom of the leaderboard as the worst performing sector to date, that gets my attention. That concern takes root at the same time consumer staples are showing strength.
That combination is not what you see in a healthy bull market. It is certainly not sustainable.
When we look at financials relative to consumer staples it becomes clearer. The ratio just hit new five year lows. The ratio has now fallen back below the prior highs of February and July of 2025, it has also lost a key pivot low from October.
Former support is falling. That’s not great news if you are long the market. It’s not debatable. It’s not subtle. And it doesn’t look very good.
If you are bullish you need to see this line snap back quickly. Not eventually. Not after a few more headlines. Quickly.
When we see multiple warning signs stack up on each other, the burden of proof shifts. If these relationships don’t recover soon the market won’t need headlines to do the damage. The market will do damage on its own.
Now you know what I do.