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Thursday, January 22, 2026

Uranium Investment Insight

تم إعداد هذا المنشور من قبل سنشري للاستشارات

Uranium Investment Insight
Navigating Corrections and Bear Markets in the SPX500 Index

Pair Trade – Long Consumer Staples (XLP) / Short Consumer Discretionary (XLY

In Layman’s Terms

  • The economic data points to consumer spending slowing to 2% in 2026 from 3.5% in 2025.
  • Based on the quarterly estimates, wage growth is also slowing relative to inflation. It's reflected in CPI increasing from 2.7% to 3% and wage growth declining from 3.7% to 3.4% between Q4 2025 and Q2 2026.
  • Consumers tend to postpone their non-essential purchases during these times and prioritise essential purchases. Thus, we expect the Consumer Staples ETF (XLY) to outperform the Consumer Discretionary ETF (XLP).
  • From the 0.67 level, the near-term targets for the pair remain at 0.72 and 0.80. On the contrary, a support is observed at 0.65 and 0.63, respectively. This implies a maximum gain of 8.6% and a loss of 2.8%.

Fundamentals

 
  • Based on economic forecasts, consumer spending in the US is expected to decline to 2% in 2026, down from 3.5% growth in 2025. The quarterly CPI forecasts indicate an increase from 2.7% in Q4 2025 to 3% in Q2 2026. In contrast, the average hourly earnings are expected to decelerate from 3.7% in Q4 2025 to 3.4% in Q2 2026. Moreover, the unemployment rate is expected to inch up to 4.5% in 2026 from 4.3% in 2025. According to the University of Michigan consumer sentiment survey, the index remains at 54, nearly 25% below last January's reading. In such an environment, consumers typically shift their spending towards essentials and delay their discretionary (non-essential) purchases. Hence, the consumer staples (XLY) may outperform the consumer discretionary (XLP), reinforcing defensive spending behaviour.
  • The analyst outlook for some of the XLP ETF's top-weighted holdings also remains positive as follows:
    Walmart – In its Q4 results, the company forecasts net sales to grow 3.75-4.75% and operating income to rise 8-11%. This indicates that Walmart is likely to see its operating income increase faster than sales for the whole year, highlighting the strength of its business. Additionally, the company is strategically positioned to boost its market share through its value and convenience options, appealing to consumers, including those from higher-income households. Regarding AI, it has also collaborated with Gemini recently to make agent-led shopping smoother and increase sales.
    Costco – The company's sales grew by 8.5% in December, driven by higher traffic and higher average ticket. Their digitally enabled sales also grew by 18% in December, compared with 16.3% in November. The company has demonstrated retail resilience, with same-store sales robust enough to support sustained long-term growth.
  • The sector rotation graph also shows increased money flow into Consumer Staples, which outperformed XLY in momentum over the past week. Additionally, the top holdings of the XLY ETF, Amazon and Tesla, have fallen below their 50-day SMA levels, further supporting the ongoing trend.

Macro ETF Flows

  • Market sentiment has weakened amid renewed trade tensions, driven by President Trump’s unpredictable stance on Greenland and escalating tariff threats toward Europe.
  • Consequently, the past week has exhibited twice the average 30-day trading volume of 15.8 million in the Consumer Staples sector. Such levels of trading volume were last observed following President Trump's announcement of tariffs in the week commencing April 7, 2025. This explicitly indicates institutional positioning towards more defensive sectors.

Source: Bloomberg


The nature of the ongoing decline suggests it is more likely a correction. However, it has the potential to morph into a full-blown bear market if Trump’s sweeping tariffs trigger an economic slowdown. Nevertheless, precedents from the last five bear markets and their subsequent recoveries provide a strong foundation to position portfolios strategically during this phase.

The table below provides a glimpse into the duration of past bear markets – highlighting the time taken for recovery and the average return over different time periods. Since 2000, the US 500 experienced four bear markets, averaging a 41% loss over 440 days. Recovery took 435 days on average returns of 18% in one month, 32% in six months, 49% in one year, and 121% in five years.


 

Source: Bloomberg

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