This Day On The Street
Continue to site
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

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

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 - Get Report) and Procter & Gamble (PG - Get Report) 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.


"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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CAT $72.81 -1.90%
PG $81.27 -0.40%
AAPL $93.21 -0.44%
FB $117.80 -0.22%
GOOG $701.26 0.80%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs