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May 30, 2006
Consumer Staple Stocks Heating Up
Consumer Staples Heating Up
Consumer Staples stocks were strong last week with Alberto Culver (ACV) leading the way higher. ACV is a consumer good conglomerate that makes everything from furniture polish to artificial sweeteners. Maybe those two things have similar ingredients. Regardless, the company makes things we need in good times and bad. The stock surged in February, consolidated in March-April and broke resistance last week. Volume was a bit light on Friday, but the stock shows good relative strength. Moreover, strength in Consumer Staples reflects a defensive risk-averse market environment.
A 52-week high for Pepsico (PEP) further confirms the rotation of money into Consumer Staples stocks. PEP has been outperforming Coke (KO) the last few years and continues to lead the way higher. The stock consolidated between 56 and 60.5 the last few months and surged off support with expanding volume the last few weeks (blue box). The move was strong enough to break resistance and forge a 52-week high. While I would not buy the breakout, I would put this stock on my radar for a pullback that could result in a buying opp.
Elsewhere within the sector, I found a double bottom breakout in Coca Cola Bottling (COKE). The stock declined the last three years and formed a base in 2006. There was some high volume surges earlier in the year (blue box) and a resistance breakout this month. The move above 48 broke the November high and exceeded the Dec-04 trendline. Keep in mind that this breakout is occurring at the S&P 500 broke down over the last few weeks. COKE shows relative strength and the breakout is bullish.
Posted by Arthur B. Hill at May 30, 2006 08:23 AM