In positive economic environments, cyclical stocks often perform better. When the economy is doing poorly, cyclical stocks often underperform the overall market. Customer Staples stocks are companies that are little affected by economic developments. They are mostly companies that provide everyday needs for individuals or businesses.

If we compare these two groups of stocks, we can see the behavior of market participants. If the chart (blue line) rises, this is an indication that market participants expect a healthy economy. If the price falls, the opposite is more likely. When evaluating the indicator, the time horizon is important. Movements of a few days are negligible. Developments over several days to weeks have a higher significance.

The best interpretation of the chart is to look for divergences. Do the indicator and the SPY have a different trend?

It is not important what percentage performance the indicator has achieved in relation to the SPY.

Demand for financial sector stocks is highest when the economy is developing positively and interest rates are at a minimum level or an interest rate increase is likely. Demand for utility stocks is higher when the stock market is developing negatively.

The ratio shows whether bonds with a high coupon and thus a higher risk are more in demand than secure government bonds with a lower coupon.

If the indicator rises, a higher risk is accepted and market participants assume a positive stock market environment.

The US Yield Curve is composed of the prices of government bonds with different maturities. The indicator calculates the value, which is obtained by subtracting the amount of 10Y bonds with the amount of 1Y government bonds.

The US Yield Curve is composed of the prices of government bonds with different maturities. The indicator calculates the value, which is obtained by subtracting the amount of 10Y bonds with the amount of 1Y government bonds.