Closely monitoring the performance of the fund and its correlation to some of the other ETFs that we are following in order to determine what does the market have in store for us

It is the first week of May 2018 and we have been following closely the recent performance of the SPDR AMEX Consumer Staples Index (XLP), which is among the most popular and widely traded ETFs.
The SPDR AMEX Consumer Staples (XLP) is an exchange-traded fund (ETF) that tracks the leading consumer-staples stocks drawn from the S&P 500. The fund’s holdings are mainly companies with a large market capitalization due to the fact that investors and traders appreciate those companies for their familiarity and stability. Since its foundation in 1998, the XLP has managed to triple in value, bringing great profits for its traders and investors. It has currently got $13 billion under management and its average daily volume is $726 million.

The daily chart clearly shows the downtrend in which the price has been trading since the beginning of the year and has managed to reach the current lows at $49 from the $59 highs in February. After making a correction of 17% YTD the XLP is now sitting at a strong support zone around the $49 mark. We believe that this correction has overextended and the XLP is currently in the process of preparing its next move higher. Furthermore, our expectations for the consumer staples and the healthcare sectors remain strongly bullish, as nothing fundamental has really happened that should lead to a longer-term trend reversal and subsequently send the prices even lower. We have been following the leading companies within the two sectors and their performance and remain strongly bullish for the next few months.

Our correlation-confirmation model is extremely important here because it would give us a chance to identify when the market is about to reverse back to the upside and give us a signal to start buying at these low levels, which of course is the basis of investing in general – buying low and selling high.

Please read our full analysis here and learn how you could make the most out of this trading set-up!


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