3 Reasons to Watch Consumer Staples Stocks

With the stock market posting yet another strong day, we all want to find the group that could lead to dynamic gains – quickly! We see three reasons why we should all be watching the Consumer Staples stocks closely.

Consumer Staples are essential products like food, beverages, and household items. They also include alcohol and tobacco, as these are considered “staples”, particularly in times like these! Consumer Staples are basically things that people will continue to purchase regardless of economic conditions.

XLP is an ETF that represents Consumer Staples stocks. If we take a look at today’s action, we can see our first reason for watching this group closely. It made a significant move through its 200 period moving average. The 200 period moving average has served as resistance since April, so the fact that this ETF has powered through the indicator speaks to the bulls taking control today.

The second thing to notice would be the fact that Consumer Staples are now testing resistance. Breaking the 200 period moving average is significant, but if it can clear the potential resistance at 61 as well, we should be off to the races!

And finally, we see plenty of “clear air” above that resistance. If we get another strong upward move, the next point of potential resistance is just above 64. That leaves plenty of room for continued short term gains – and solid profit potential.

Jeff Drake
True Edge Trading