Heightened volatility continues as the Consumer Staples sector oscillates around a long-term zone of support and resistance. Relative to the S&P 500, the group remains an outperformer. Long-term breadth received a positive boost in yesterday’s trading session, but bounce players should remain cautious and focused on risk management in this environment.
S&P 500 Consumer Staples
Consumer Staples are in process of testing the 745 level as support once again, after chopping around this zone for the prior two months. The price action takes place below a declining 50-day moving average, leaving the bias to the downside. Relative to the S&P 500, the uptrend of outperformance remains intact as the ratio trades above the rising 50-day moving average.
Food and Staples Retailing have displayed similar price action to that of the sector, testing long-term support at the 600 zone below a declining 50-day moving average after oscillating around this level for the prior two months. Relative to Consumer Staples, the group trades down from relative resistance at the highlighted zone below the ratio’s declining 50-day moving average.
Food, Beverage, and Tobacco have tested short-term support at the 820 zone in yesterday’s trading session below the declining 50-day moving average. Relative to Consumer Staples, the group remains an outperformer, trading above the ratio’s rising 50-day moving average.
Household and Personal Products have recovered a long-term zone at the 830 level to the upside below a declining 50-day moving average. Again, this is another area that the group has struggled with in the past. Relative to Consumer Staples, the group is knocking on the ceiling of relative resistance above the ratio’s flat 50-day moving average. Should a relative breakout occur, it could set the stage for a bearish to bullish reversal in relative performance. Until then, a neutral bias remains prudent.
Breadth
The percentage of Consumer Staples components trading above their 200-day moving averages received a boost to the upside in yesterday’s trading session in crossing above the 60% mark. There were 168 instances since 1996 where the percentage of Consumer Staples components trading above their 200-day moving averages crossed above the 60% mark for a median gain in the sector of 2.97% with a 67.88%-win rate over the following quarter. While these results have been attractive, investors would be prudent to utilize the 745 zone at the index level for risk management.
This note is a preview of our Thursday Sector Deep Dive. See our thoughts and more in the full report.
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