Staples exhibit sustained leadership in bear markets, not bulls – Steve Strazza, “A Bear Market Base”, The Strazza Letter, April 16, 2025

It’s hard to gain perspective on the market given the daily swings we’re experiencing. In order to do so, you must expand your perspective. When you do that, you can see what’s really happening year-to-date (YTD).

As you can see in the first chart above, Consumer Staples (XLP) are significantly outperforming the rest of the S&P 500 (SPY). That is classic defensive behavior. As you can see in the second chart, Gold (GLD) and Gold Miners (GDX) are having a huge year while The Magnificent 7 (MAGS) are down 20%. Again, the defensive play is working while the offensive one is getting taken to the woodshed. If it looks like a bear market and acts like a bear market, it just might be a bear market.

Gold and gold stocks continue to look good to me despite their huge move higher (“Persistent Inflation Means Gold Will Continue To Shine”, February 12, 2025, Top Gun Financial). If the market and economy continue to weaken, the Fed will be forced to cut rates despite the fact that inflation remains stubbornly high. That will weaken the dollar further and provide the next catalyst for Gold to continue to go higher.

Last, take a look at the chart of the S&P Financials (XLF). This ETF has stocks like Berkshire Hathaway, JP Morgan (JPM) and Goldman Sachs (GS) that were stellar performers during the bull market. Berkshire is off to a great start this year because investors are betting on Buffett to put his huge cash hoard to work effectively when the time comes, but most of the leading financial stocks are performing poorly.

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