Consumer staples have lagged this year as investors look past the stay-at-home trend. The biggest stock in the sector, Procter & Gamble, is forming a bearish triangle pattern.
The $128 level is important because it was resistance in February 2020 – immediately before the pandemic slammed markets. PG has been holding the level for more than two weeks while making lower highs.
The diaper, soap and paper-towel giant also consolidated below its 200-day simple moving average.
Interestingly, PG reported strong results on January 20. But no one particularly cared. Analysts also see conditions weakening as sales slow and commodity inflation bites into margins.
Overall, PG isn’t an exciting new-technology stock, or an undervalued cyclical (like financials, energy and industrials.) It’s relatively expensive and offers little exposure to reopening or innovation. Lots of investors own it, which makes it vulnerable to selling as they look to enter more exciting areas.
The lackluster response to PG’s last quarter suggests that may be happening. A period of distribution could be at hand.
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