Consumer Staples a Defensive Move?

In Friday’s posting (Missed the Train in the Semi Sector?) I covered the negative seasonal pattern in the Market Vectors Semiconductor ETF (SMH). While the index looks ready to break above the December 2015 highs, I pointed out that the ETF does not have a good seasonal track record over the next several months. Institutional traders just have not displayed much enthusiasm for buying semiconductor stocks in the summertime.

Surely it would be a good defensive move to buy Consumer Staples, right? For example, the top ten holdings in the Consumer Staples Select Sector SPDR ETF (symbol XLP) are all products or retailers that people regularly buy or frequent. Whether the economy is good or bad, no matter if it is the quiet time for tech product announcements, and even if Disney’s latest movie release is a flop, Coca-Cola and Colgate toothpaste still fill shopping carts, people go to CVS and Walgreens for BAND-AID®’s, and who can’t live without Costco pastries and discount wine.

5.31.16.1blogBut whether the economy is in question or not, you may want to hold off considering moving money out of riskier sectors into a ‘defensive’ sector like Consumer Staples.

Over the next 4 weeks, XLP, in all 17 years of its existence, had not been able to muster one gain. Seventeen years of losses for the next 4 week period. If you feel every trade you’ve tried recently has turned into a loser, you probably still don’t have as bad a track record as XLP:

5.31.16.2If you want to be defensive, consider moving to cash, and in a few weeks or so, as long as the markets aren’t in a dive, the odds will be a little more in your favor, should you be determined to take a position in XLP. And if they are in a dive, go to Costco for a bottle of discount wine to help you analyze the situation.

Of course, there’s much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

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Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.