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According to New York-based investment firm BTIG, shares of the largest consumer staples ETF are in a “vulnerable” state.
The fund BTIG referred to was the Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP), which has approached overbought levels.
Currently the Consumer Staples ETF (XLP) trades at $82.27 a share, and hovers near its all-time high of $82.77.
However, BTIG noted that the exchange-traded fund is working on its eighth up week in the last nine with the one lower week recording a minor dip of -0.14%. As a result, BTIG showcased that the weekly relative strength index technical indicator sits at 74 which is the highest level for the fund in ten years.
“Since 2000, there have been ten prior times when XLP’s weekly RSI exceeded 73. Average and median returns looking 1-8 weeks out have been quite negative, with only the 2004 and 2013 occurrences avoiding any weakness,” BTIG’s Jonathan Krinsky said.
Krinsky went on to highlight that the average 2-week return for XLP has been -2.4%, and down 7 of 10 times
“We generally like the defensive groups here and XLP did just make a new high out of a multi-year base. That should be met with higher prices over the medium-term, but over the next several weeks we see some downside risk to the group,” BTIG added.
Snapshot of XLP
- Year-to-date price action: +14.2%.
- 1-Year price action: +13.1%.
- Assets under management: $16.98B.
- Number of Holdings: 39.
- Total weighting of top five holdings: 54.35%.
- Top five Holdings: Costco Wholesale Corp (COST), Procter & Gamble (PG), Walmart (WMT), Coca-Cola (KO), and Philip Morris International (PM).