Over the last one month timeframe only five major S&P sectors can claim they are in the green. The financials have acted the best, and the staples a close second. There is some nascent strength here in the last few weeks, but on a YTD basis they are the seventh best behaved group. Below is the ratio chart comparing the staples to the S&P 500, and they could be on the verge of building the right side of a good looking cup base. There has been some big bifurcation in the group with power seen in food and personal products and weakness in tires and drug retailers. Names within the sector are offering nice capital appreciation potential, with dividend yields.
For those old enough to remember the famous battle over soda supremacy back in the 1980s, Coca Cola was considered superior back in that day. But fast forward to the present and there is no question which is the better equity. PEP sits just 2% off most recent 52 week highs, while KO sits 6% off its own peak. On a YTD timeframe PEP is higher by 13%, while KO swims near the UNCH line, and both carry nice dividend yields better than 3%. Looking at their charts, PEP trades in a much tauter fashion, hallmark bullish traits compared to KO’s wide and loose trade. The Vitamin Water KO has in its umbrella is spot on though.
Good things come to those for wait. In stock market jargon its called patience and waiting for your spots. Below is the chart of EL and how it appeared in our 4/26 Consumer Staples Report. This stock reported earnings on 5/1, and the reaction the next day was a 10 handle negative reversal after hitting a wall at the round 180 number. A move back into the 165 level would be would be its initial touch of its rising 50 day SMA (best seen on daily chart), often a good entry point, following a break above a 158.90 cup base pivot on 2/22. There should be a nice foundation there, pun intended.