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Dr. Kris hails from the land o' lakes, beer, bratwurst, and Bucky Badger. She traded in her cheese hat for a propeller beanie and has never looked back. She has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her... More
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  • Market Notes: Investors Adding Staples To Their Stables -- April 28 0 comments
    Apr 28, 2014 5:03 PM | about stocks: PEP, DPS, SBMRY, MO, BTI, CL, PG, XLP

    The sector rotation that has been on-going for the past couple of months continued today as investors continued to shed internet and software, banks, telecom, gaming, and homebuilder stocks while favoring the safety of consumer staples (more on this below) and oil & gas producers/refiners/MLPs. The VIX made a brief run above 15--the bull/bear dividing line--before nose-diving straight back down to close below its opening value. Midday, the major averages were testing major support levels, but they managed to close above them--at least for one more day. Midday values for the negative VWAPs (see support/resistance levels below) were at bearish contrarian levels (-200 and below are extremely bearish values) so it isn't terribly surprising that the market rebounded when it did.

    This wild roller-coaster action that we've been experiencing for the past couple of weeks could go on for a while but I doubt it. The fact that the midday rally for the market leading Dow Transports was muted (compared with the those for the other major averages) indicates that today's rally may be a head-fake. An escalation of Russian military action in the Ukraine would likely trigger a market sell-off along with a possible disruption of oil and gas supplies to Europe which would likely further the rally in this part of the energy sector.

    Consumer staples becoming a staple of investors
    Investors pushed the Consumer Staples etf (XLP, $44.29) to a new all-time high (since late 1998 inception) fueled mostly by gains in beverage makers, tobacco, and home products. And what's not to like? This is a defensive sector that can withstand times of political and economic instability. Although it's been under accumulation, it's still not over-priced compared with other sectors. As a bonus, most consumer staple stocks do pay dividends. Breaking out to new highs today were the following staple stocks (along with closing price, price to earnings ratio (P/E), and the current dividend yield (D/Y): Dr Pepper/Snapple (DPS, $55; P/E 16.6; D/Y 3%), Pepsico (PEP, $87; P/E 19.4; D/Y 2.6%), Anheuser-Busch (BUD, $110; P/E 12.4; D/Y 2.1%), Altria (MO, $40; P/E 18; D/Y 4.8%), British American Tobacco (BTI, $117; P/E 17; D/Y 4%), and Colgate-Palmolive (CL, $68; P/E 29; D/Y 2.1%). Not hitting new highs but breaking above overhead resistance levels were Proctor & Gamble (PG, $83; P/E 21; D/Y 3.1%) and British bottler SabMiller (SBMRY, $54; P/E 26; D/Y 1.8%). Except for BTI, all of these issues traded on heavier than normal volume with SabMiller trading on more than five times its average.

    Stocks: PEP, DPS, SBMRY, MO, BTI, CL, PG, XLP
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