[Chart of the Week] Consumer Staples Can't Keep Up

JC Parets
December 23, 2020

Have you noticed that Consumer Staples are working on their lowest levels relative to S&Ps in over a decade?

Remember, underperformance from Staples is a classic characteristic of strong uptrending stock markets, which I'm not sure if you've noticed, we've been in. 

Last week I went into detail about what we're looking for as a sign of a market correction. In fact, I showed 4 important factors we're watching. Make sure you're caught up on those here.

Today, I'd like to point out how one of those 4 signs continues to flash Green, meaning: Buy Stocks.

Here is the relative strength of Consumer Staples inverted. When the black line is moving up, Staples are underperforming. When the black line is moving down, Staples are outperforming. As you can see, underperforming Consumer Staples is consistent with higher stock prices and the opposite is also true, when Staples are outperforming stocks are usually under pressure.

We're working on putting in the lowest relative close in over a decade for these Staples. We'll be watching for a change in trend here and some outperformance from Staples as a "head's up" that something may be wrong (along with these other 3).

To be clear, we are NOT seeing that. In fact, we're seeing the exact opposite of that: Continued relative weakness out of Staples.

The higher that black line moves up, the better stocks are probably doing.

That's how I see it.

What's got your attention?

Let us know.

JC

 

Here is a list of stocks we want to buy.

 

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