Guest Author: Chris Kimble (See About the Author end of article.)
Note: This is a cross post with Advisor Perspectives dshort.com
Often investors and investment professionals use so-called “Defensive Sectors” to help reduce downside risk to an overall portfolio. This idea helped for a good while back in 2008, yet once these Defensive ETF’s started breaking support, they fell a ton along with the broad market.The chart below is a 3-pack reflecting three so-called Defensive ETFs: Consumer Staples, Healthcare and Utilities.
As of the past couple of days, the Utilities ETF/XLU has broken key support, with Staples and Health care pushing support to an extreme. If investors/professionals are using these ETFs, a big caution sign will go up if support is taken out, not only towards these three, but the broad market as well. Remember, once the defensive plays started to breakdown in 2008, major weakness was seen across the board.
What happened in 2008 that could be happening right now? Something that could trigger the defensive issues to fall? Put your hard hat, because the U.S. Dollar is creating a series of higher lows!
Related Articles
Weighing the Week Ahead: Has Stock Selling Gone too Far? by Jeff Miller
The Double/Triple Doji: Have We Been Warned? by William Kurtz
Weighing the Week Ahead: An Economic Tipping Point? by Jeff Miller
Stock market Cycle Analysis by Erik McCurdy
Consensus: Groundhog Decade for Stocks by Ed Easterling
Call-Put Ratio Approaches an Extreme Low by Macrotides
About the Author
For the most up-to-date Kimble analysis, check out Chris’s blog: Kimble Charting Solutions