Consumer Staples are not sexy. Toilet paper, laundry detergent, diapers, milk, bread…. you need them every day no matter what is going on in the world. the companies that make these items are also not sexy. Clorox Company (NYSE:CLX), Procter & Gamble Company (NYSE:PG), General Mills Inc (NYSE:GIS)…. mega cap companies that usually offer a good size dividend to compensate for low growth. Not a place that day traders usually look for exciting stocks.
But Consumer Staples can shed some light on the state of the economy and confidence of consumers. These companies do not have high margins, but they are massive, so growth in the economy falls right to the bottom line. And right now the ETF that tracks Consumer Staples is sitting at an all-time high.
After printing a double bottom from November into December, the Consumer Staples Select Sector SPDR (NYSE:XLP) is up 11%. It has consolidated the gains over the last 3 months while sitting at the all-time high. This has allowed momentum indicators to reset lower. The RSI pulled back from an over bought condition and held at the base of the bullish zone. Over the last 3 weeks it has been moving back higher. The MACD also reset from an extreme level down to near zero. It too is now crossed up and moving higher. Keep an eye here. A break to the upside not only signals a run higher in the ETF but renewed strength and confidence in the economy.
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