Consumer DefensiveConsumer Defensive are overbought on inflation readings. Need a retracement, which shouldn't go deeper than 20ema, then the upward trend should resume
XLP trade ideas
XLP BreakoutBeen watching this setup for a little while. not much you can do now unless you're already in XLP names from lower, but it's a great example of capital flows re-orienting around defensive names at the moment, in light of potential tapering / rates moves in the future. High mult continues to flounder.
XLPXLP setting up for a breakout. A intraday cross above the 73.25 will give XLP a massive pump. An increase in green volume will be the key.
It's time to be defensive next couple months- This chart is showing the price action for XLP/ SPY. XLP is the consumer staples ETF and is the sector that investors flock to during risk off situations in the market.
- What I'm trying to show here is the massive divergence between price and RSI. Momentum is building up for last few months which means a massive rally in XLP/ SPY is coming.
- A couple examples are from 2014- 2015 and 2007
XLP - Consumer Staples Ponzied - Made in China - Stuck at SeaCOGS/PPI etc. is through the roof. Shipping a product? Good luck. Atleast #cannabisreform is going on. $KERN- the CANNABIS DATA Software!!! GO USA MSOSs!!!!
Multi State Operators! #thegem #jobsandjustice *rising rates environment.
Go Small cap gems. #valueinvesting
XLP/SPY : Risk On Till XLP Starts Outperforming SPYXLP - Consumer Staples are up 40% from their covid low, SPY is up over 90% since April 2020.
A bottom in XLP/SPY has always signaled a larger degree market correction. Investors rush into XLP as a flight to safety.
The ratio XLP/SPY looks like its chugging down still and have followed in the weakness of defensive stocks these past weeks.
WAKE ME UP WHEN XLP STARTS TO OUTPERFORM SPY until then zZz
XLP1. EMA's crossing down?
2.Price near support and is oversold.
3. If price breaks through bottom oval we could see a true retracement to support.
4. I price breaks through top oval, we could see a retracement to the upside.
SPX Vs. Staples, far away from any correction in sight !!!!- All else equal
- We are far a way from any possible correction, or NOT !!!
- We are far a way from the "Zero" line.
- High risk using just this as an indicator.
Is XLP beginning to overcome XLY?What could it mean for the markets if XLP stocks outpaced XLY stocks?
Consumer Staples Mean Reversion200-day moving average looks like a magnet. A bearish thesis could be based on a slow grind back down to this indicator.
If you're bullish you do not want to see XLP/SPX bounce hereHere's another ratio pair I like to watch. Its SPDR Consumer Staples ETF vs SPX. This chart will rise when XLP out performs the SPX on a relative basis. As you can see the XLP/SPX has just come into a key support zone. If XLP/SPX breaks this support it's very bullish. However, if it bounces like is has in the past expect a sell off in stocks.
Note.. the lower chart is the SPX.
The defensive sectors continue to be weak.Until I get confirmation with price I have to maintain a bullish bias. Price of the major indexes continue to hold the highs
in the midst of uncertainty and a slew of bad news and the defensive sectors (XLU/XLP) remain weak signaling a
continued appetite for the riskier assets.
ridethepig | Consumer Staples🛒 Consumer staples is dealing with a remarkable situation on the macro front which we have discussed at earlier opportunities (see ALPHA PROTOCOL: SEEKING IMMEDIATE EXTRACTION).
One should be wary of the immediate risk for a waterfall as consumer staples hang onto the highs by a fingernail. After completing the 5 wave sequence to the topside, clearly the end of the road is approaching for this economic cycle and we must decline into 2021/2022 in order to untangle the flows for 2022 -> 2030. Time to start paying close attention for early signs of a turn.
Risk is threatening to breakdown in an impulsive fashion, our opponents are attempting to prevent the breakdown, but with stimulus delayed till after the elections the protective move is out of the question this week. Strong support from a technical perspective is found at 53/52 and 48/47.
Consumer staples are the best of all possible worlds right nowSo we've got macroeconomic forces pulling in a couple different directions right now. One the one hand, the Fed is talking about pumping trillions of dollars more liquidity into the market, which should further inflate equity prices. On the other hand, with coronavirus cases continuing to rocket, we're starting to see economic data fall off a cliff. Consumer staples and metals are the natural havens.
Today, the University of Michigan measure of US consumer sentiment for July came in at 73.2 versus the consensus expectation of 79. This was the largest negative surprise on record, and it's going to have a big negative effect on the consumer discretionary sector. And what's bad for retail is also bad for banks, as CMBS delinquency reached 10.32%. We also got a large negative surprise on housing starts today, up only 2.1% vs. the 4.9% consensus expectation. Home building has been the one bright spot in the economy as Americans flee the cities for the suburbs, so this is a concerning deterioration in that market. The ECRI leading index has been flattening, and mobility is falling as scared consumers remain at home even in states that haven't reclosed. California's reclosure this week was a huge deal, since the state accounts for nearly 15% of US GDP.
Consumer confidence chart:
twitter.com
Mobility chart:
www.dallasfed.org
Meanwhile, the Fed's balance sheet grew this week for the first time in four weeks, which means that liquidity-- and the accompanying asset price inflation-- is on the upswing again. Congress is actively working on as much as $3.5 trillion in new stimulus, and Lael Brainard of the Federal Reserve is signaling that the Fed may get more aggressive about trying to hit its 2% inflation target, even to the point of "overshooting" that target to make up for years of weak inflation. (Current CPI is about 1.2%.)
See Brainard's remarks here:
www.federalreserve.gov
With economic data starting to sour, I don't really want to be in equities. But with more liquidity coming, I don't really want to be out of equities, either. My solution is to hide out in metals and consumer staples. A fall-off in mobility will be bad for nearly every sector of the economy, but it should be bullish for consumer staples and grocery store stocks, some of which report earnings in the next few weeks. That makes the consumer staples sector a natural safe haven as California recloses and frightened consumers stay home. Consumer staples also pay dividends, and they're a little more reasonably valued than technology, which is the other sector that might conceivably benefit from reclosing. As you can see on the chart, staples recently made a bullish trend line break (which I alerted before it happened), and they have continued to strengthen since.
Consumer staples testing trend line on reclosing & stimulus newsConsumer staples tested and got rejected from a critical trend line this afternoon. The sector has been strengthening due to demand for groceries as economies reclose. Today it also got a bump thanks to news that people with incomes less than $40,000/year may get a second round of stimulus checks. This ought to help juice consumer demand a little. I've also been impressed with the staples sector's performance on earnings reports so far, and I'm expecting the sector to continue to beat analyst expectations.
The staples sector has been beneath a downward sloping trend line since February, but it has tested the trend line three times in fairly rapid succession and may be gearing up for a breakout. I've set an alert on the trend line and will be watching for a cross with good volume as my buy signal.
XLP Fractal Inverse Head and ShouldersDrew this a few days ago and it is playing out.
This is eyeing $60.
