Consumer Staples (XLP), Utilities (XLU) and Health Care (IYH) have reflected very good relative strength over the past 4 months, outperforming the S&P 500 by a good percentage (see inset in 3-pack below).
Of late though these often viewed “defensive ETF’s” have broken a key support line that could be sending a macro message to the markets.
CLICK ON CHART TO ENLARGE
Watch these three ETF’s very closely going forward. They held up really well for a while in the 2007/08 broad market decline. Once they broke key support back then, across the board weakness seemed to take place.
They are either going to signal that money is going to move from defensive issues back to growth or that money flows will head towards cash and capital protection!!! KEEP A CLOSE EYE ON THESE THREE!!!
Van….In general better than a MMF…do watch the floating rates should bond pressure enter the market. LQD broke a key line in the sand today and Sugar looks to be suggesting some upside yield pressure might not be far away.
Chris….looks ok, above a support line that has held pretty well. Looks better than silver, at SLV hit its 38% level yesterday for the second time and backed off pretty hard.
What are your thoughts on Floating Rate Bond Funds as a ST risk-off alternative to MMF?
Chris–how does gold look to you now?