Sector rotation Cyclical to Defensive

I heard some interesting commentary this week from the pros about watching for signs in the cyclical:defensive sector ratio.

I put together this chart using (XLK+XLI+XLB)/(XLP+XLU+XLV).

It is a composite of tech, industrials and materials indexes as a ratio to staples, utils and health sector indexes.

The chart ratio is about 1:1 right now.

In a late stage economy if earnings expectations plunge in the cyclicals the chart ratio should show the capital rotation into the defensive sectors.

Worth watching for a signal!