Sector rotation is an important part of my studies and October clearly points out to a broken market structure. Consumer staples sector surperformance compare to the index (SP500) does not bold well for the market in general. Not only this sector (along with utilities) did beat the SP500 in October, it actually came out with a positive return. That could means...
Consumer Staples (usually a defensive investment) are taking precedence over Consumer Discretionary (usually aggressive posture, when all is well) in October. We are pressing lower and showing the largest drop in a while. This is potentially a leading indicator of some kind of slowdown coming.
XLP lining up bullish on the daily above 54.52 support with 50/200sma prepping golden cross (daily chart) and on the weekly chart 20/50ema golden cross prepping to confirm as well. This move could be extended over the next 1-2 quarters but will take time. As SPY pushes new alltime highs (again) I expect this to help as a minor catalyst to the already bullish setup...
Some new bullish signals for Consumer Staples sector:
Solid Price action over SMA(20d) and SMA(50d).
SMA(20) crossed the SMA(50) the last days of the past week (Golden Cross!).
A good strategy to go long is to wait for a correction around the SM(20d).
Consumer Staples slump due to amazon effect, higher interest rates, weak earnings performance, trade wars.
Multi-year technical support level and divergence in recent drop from all time high.
Value managers buy the dip. Play the bounce.