One of the noteworthy developments in recent days has been the move in consumer staples. Defensive names along with higher dividend yields have fallen out of favor in 2018 as rising bonds yields makes them less attractive to investors, who can get a similar yield from bonds without the higher risk that comes with equities. The Consumer Staples Select Sector SPDR ETF (XLP) is down nearly 14 percent YTD, underperformed the S&P by a wide margin. Now the question is whether recent selloff is a beginning of an end or there’re more pains ahead? Below is an update look at a trade in XLP.
The graphic below is from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red.
Chart 1.1 – Consumer Staples Select Sector SPDR ETF (weekly)
Our “U.S. Market Trading Map” painted XLP bars in red (sell) – see area ‘A’ in the chart. The first dominant feature on the chart is the rising trend line starting in early 2009. The second dominant feature of the chart is the downward trend since early February 2018. The late April selloff pushed the ETF below the 4-year moving average. The last time the ETF broke below that level was during the 2008 financial crisis…Click here to read more.
You see, our trend-following system is very unique as it attempts to pick turns before others see them. Timing is everything and if you’ve applied our system correctly, you should have made a killing in any markets.
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