Why Is The Consumer Staples ETF Outperforming The Season?
Michele Schneider | Oct 26, 2021 12:36AM ET
The Consumer Staples Select Sector SPDR® Fund (NYSE:XLP)) is known to be an area of focus through market downturns as it offers exposure to companies that are historically safety plays. Some of XLP’s biggest holdings include companies such as Walmart (NYSE:WMT), PepsiCo (NASDAQ:PEP), Colgate-Palmolive (NYSE:CL), and more.
However, major indices are sitting at or near new highs with XLP lagging not far behind. While this is not signaling a direct market downturn, it is showing that investors are keeping XLP on watch in case the market begins to look weak. Furthermore, XLP is likely rising due to worries of inflation and the well-known shipping problems the U.S continues to face.
With that said, seasonally, XLP performs poorly in October, but as seen in the above monthly chart, XLP has outperformed the past 6 years of trading thus far.
This is an interesting trend if XLP continues to push higher along with the general market.
Looking at XLP from a daily perspective, it made a second close over its 50-Day moving average at $71.16 yesterday. This confirms a bullish phase change and potential new support area if XLP holds its major moving average. If consumer goods continue to have pressure from increasing demand and waning supplies, we can expect this to have a positive effect on price.
On the other hand, if XLP breaks down, this could be showing that prices of general goods and potentially inflation are beginning to ease. However, the amount of time it will take for inflation pressures to ease is not easy to predict which is why it’s best to keep XLP on watch for long-term trend changes.
h2 ETF Summary/h2- S&P 500 (SPY) New highs.
- Russell 2000 (IWM) Needs to clear and hold over 229.84.
- Dow (DIA) 356.60 needs to hold as new support.
- NASDAQ (QQQ) 370 support are from the 50-DMA.
- KRE (Regional Banks) 71.60 support area.
- SMH (Semiconductors) Inside day with support from 264.58 the 50-DMA.
- IYT (Transportation) 270 next resistance area.
- IBB (Biotechnology) 160.24 resistance. 153.38 support.
- XRT (Retail) 97 resistance area to clear.
- Junk Bonds (JNK) 108.06 next support level.
- SLV (Silver) 23.04 resistance.
- USO (US Oil Fund) Holding the 10-DMA at 57.20.
- TLT (iShares 20+ Year Treasuries) Flirting with the 200-DMA at 144.06.
- DBA (Agriculture) 18.93 support.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.