‘Tis the Season for Consumer Staples
- Posted by Greg Harmon
- on January 26th, 2018
The investment world generally talks about Consumer Staples in tough time. Recessions, corrections or downturns in the market. They are thought of as a defensive play. A place to store value. The story goes that no matter how the economy or market is doing consumers will always need to go to the grocery store for items like food, soap and toilet paper. Many consumer staples companies also pay relatively large dividends to retain an investor base as an offset to slower growth.
But in a booming market Consumer Staples can also drive higher. And we have seen this especially over the last 3 months. The chart below shows that is no fluke. Looking back over the last 5 years the end of October to the beginning of the new year has marked a bottom in the chart ans the launching point for a new move higher. A seasonal effect. The last 3 times this has occurred at the 100 week SMA. And each time it has produced an initial move to a new high followed by a consolidation. Then a secondary move to a higher high.
Looking at the latest move shows momentum running hot on the RSI but the MACD with some room to its prior peaks. This would suggest there may still be more upside remaining. And seasonally the prior moves have run until June or July. If this continued the Measured Move higher gives a possible target to 61 on the Consumer Staples ETF. Not bad for an ETF with a 2.6% payout yield.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
blog comments powered by Disqus-
Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)