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.
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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!!!