VDC – Vanguard Consumer Staples

The Vanguard Consumer Staples Sector (8/25/16) Short-term (Neutral) : Intermediate Term (Positive) : Long-term (Positive) Consumer Staples represent the conservative investment strategy when improving economic growth is uncertain. This seems adequately reflected in the persistent rise since January 2016. After a severe breakdown in August 2015, a base was formed under 131.25. After a definitive move above that base in march, it was tested in April and again in May. We've seen a "stair-step" accent. The base pattern projected to 142.50, which we recently exceeded. Since then, Consumer Staples have been in a consolidation/pullback phase. Technically, the two-month consolidation has been healthy. The momentum indicator, MACD, has retreated from "overbought" to down-right neutral. The previous highs, most recent low, and short-term up trend line crisscross at 139, offering some support. If that fails, we would expect to fill the gap at 136.42. Clearly, we haven't broken the pattern yet, but this is an "apexing" triangle, putting the squeeze on price. Given the timing and the prevailing short term downward pressure, a pullback to 136.50 could cause very little damage to the long-term. Staples tend to be a safe place to park during times of concern or turmoil. The market might be fearing some short-term disruptions due to the Fed and the elections, but we continue to see signs that many of the negatives are already baked in the cake. A close above 143 would be required to excite the potential for further upside targets. Cons Stpls Top 10 Holdings PG – Procter & Gamble KO – Coca-Cola Co. PEP – Pepsico Inc. PM – Philip Morris Intl. Inc. MO – Altria Group WMT – Wal-Mart Stores CVS – CVS Health Corp. COST – Costco Wholesale Corp. MDLZ – Mondelez Intl. Inc. Cl A WBA – Walgreen Boots Alliance Inc.