Saturday, March 22, 2008

WTF Among the Consumer Staples Stocks?

My recent posts have tracked money flows for Consumer Discretionary stocks, Industrials issues, and Materials shares. This post takes a look at five highly weighted Consumer Staples stocks, plotting their cumulative money flows (top chart) and five-day average flows (bottom chart) against the Consumer Staples ETF, XLP. The five companies whose flows I've aggregated are PG, MO, WMT, KO, and WAG.

A pattern that we saw with the three sectors mentioned above is also apparent here: during recent market weakness, XLP failed to break below its January price lows. Note, however, that during the recent weakness, cumulative money flows for the Consumer Staples shares have been in a steady downtrend, testing bear lows. This is quite different from the flow patterns seen among the Materials and Consumer Discretionary shares, which showed reduced selling pressure during recent market declines.

Five-day flows remain weak despite a recent bounce in the sector. Clearly, despite the ability to hold the January lows, we're not seeing sustained buying interest among the Staples.


Bryan said...

Hi Doc, you have mentioned in the past that you find it useful to watch the way that XLP and XLY move in relation to each other. Given the interesting contrary pattern in the cumulative money flow for XLP perhaps it would be worth keeping an eye on the XLP/ XLY moneyflow relationship too?

Brett Steenbarger, Ph.D. said...

Great idea, Bryan: I would expect relative strength patterns in the flows to provide some worthwhile themes in general--