Consumer Staples are Overbought in the Short-Run but the Trend Remains Positive

Developed market consumer staple stocks are up a health 5.5% in 2016 compared to an 80 bps decline for developed market equities in general. Looking at consumer staples, across a variety of regions, it seems that this group is probably overbought in the short-term. However, the overall trend remains very positive as consumer staples is the only sector that is breaking out to new highs.

84% of DM consumer staple stocks are trading above the 200-day moving average. This is in contrast to just 61% of DM stocks in general that are trading above the 200-day moving average. And in certain weaker sectors of the equity market, such as in financials, only 49% of stocks are trading above the 200-day moving average.

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The overbought condition exists regardless of which region you look. In DM Americas, 82% of consumer staple stocks are trading above the 200-day moving average. In DM EMEA, this statistics stands at 79% and in DM Asia a whopping 90% of consumer staple stocks are trading above the 200-day moving average.

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Nevertheless, as we mentioned early, this an overbought condition in a positive trend. DM Consumer staples have poked out to new all-time highs while the GKCI DM Index remains about 9% below the May 2015 high. Consumer staple stocks are undoubtedly the sector that is leading the market currently.

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