Rotate Back to Consumer Staples

• Posted by Greg Harmon
• on August 10th, 2016

Simone Biles was busy rotating around the Rio Gymnastics events Tuesday, leading the team USA women to an all-around team gold medal by a record margin of victory. The stock market has been going through its own rotation. Last week the Federal Open Market Committee released their policy statement and the Consumer Staples Sector fell.

The chart below shows the pullback in the Consumer Staples ETF ($XLP) as well as how far it has moved up since the August low. There has been rising trend support in place over that one year run higher. And the most recent pullback is at that trend line. You can also see a break above resistance at the end of June, following a 3 month consolidation. The recent pullback has tested that breakout level and held as well.

Just because the price is at both support levels does not mean that it will reverse. But when you look at the momentum turning positive it is worth watching. The RSI is moving up to the mid line for a break higher and the MACD is leveling after pulling back. A move over 55 would confirm a reversal higher.

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