This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Chart of the Day: Why Consumer Staples Are Falling Off a Cliff

Stocks in this article: CAT PG

NEW YORK (TheStreet) -- Both the industrial and consumer staples sectors have now technically broken below major, intermediate-term areas of support, according to Schaeffer's Investment Research's senior equity analyst Joe Bell.

Both sectors have been underperforming, with industrials now down nearly 7% for the year and staples down 1.79% vs. the S&P 500's 4.63% rise. Bell said he'd be leery about jumping into either sector in the intermediate term, "especially with the amount of technical strength that we've see in the U.S. dollar."

The declines have been highly correlated with the strengthening dollar in recent weeks, as pictured in the above chart created by Schaeffer's Investment Research. Many of the largest industrial and consumer staples companies such as Caterpillar (CAT) and Procter & Gamble (PG) have outsized exposures to the international markets, helping drive that correlation. P&G has been particularly choppy of late amid concerns that multinational companies could take a hit in corporate profits if the U.S. dollar were to keep bulking up.

Read More: Florida, Nevada Can't Win for Losing on Mortgage Crisis

"Industrials have kind of broken down," Bell said. "If you look at a chart, it's been in a long-term uptrend in the market since 2009, and then in 2011 ... quite a bit of momentum. But then if you look at a daily chart, it's broken up. It's a trend that's been in place for more than year."

Consumer staples have been tracking a "drastically" similar kind of pattern, he added.

"Really, it's kind of falling off a cliff here."

After underperforming for the past several years, Bell said the greenback is on its way up.

"It's obviously going to have a lot of areas of resistance where selling pressure might come in, but if it can clear the $22 area that has been a pivotal area of support and resistance in the past, it will have room to advance even further."

-- By Andrea Tse in New York

Follow @AndreaTTse

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs