Continue to Book Profits in Consumer Staples

NEW YORK ( TheStreet) -- Consumer staples stocks continue to perform well in 2012, but strength in these stocks should be used to book profits, particularly in those names that have set multiyear highs recently.

Back on Aug. 6, I profiled this sector in an article titled " Book Profits in Overvalued Consumer Staples," and this remains my theme in today's update.

Back on Aug. 6, 67.4% of all stocks were undervalued, according to my Web site, As this week began, the percentage of undervalued stocks is down to 45.7%.

On Aug. 6, the consumer staples sector was 11.3% overvalued, and now it's 14.5% overvalued.

My benchmark for this sector remains the Consumer Staples Sector SPDR Fund ( XLP).

XLP's weekly chart shows overbought momentum, and this condition began at the end of the week of July 27.

XLP will remain positive but overbought with a weekly close above its five-week modified moving average at $35.58.


If you are employing a "buy and trade" strategy in XLP, my annual value level lags at $32.87, with monthly and weekly risky levels at $36.09 and $36.35, respectively.

The first of these levels was tested at last week's multiyear high at $36.11. My quarterly risky level is $37.64.

Source: Thomson Reuters

Today I profile eight of the components of XLP that have Strong Buy or Buy ratings and set multiyear highs between July 30 and Sept. 17.

The above table shows data from covering eight components of the Consumer Staples Sector SPDR Fund.

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by this percentage, according to ValuEngine.

VE Rating: A "1-Engine" rating is a strong sell, a "2-Engine" rating is a sell, a "3-Engine" rating is a hold, a "4-Engine" rating is a buy and a "5-Engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

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