U.S. consumer staples stocks based on four technical indicators.
We limited our pool to the S&P 100 Index.
We examined each stock’s moving average, which is the average closing price over a recent period, usually the past 10 weeks (10wMA) and the past 40 weeks (40wMA).
Looking at the moving average week by week gives us a sense of investor’s behaviour: Are they growing more (or less) enthusiastic about the company’s outlook and are they more (or less) likely to purchase the stock.
We also examined the stochastic and on-balance volume (OBV) indicators. The stochastic indicator measures investors’ activity. It looks at today’s range (defined as today’s high minus today’s low) and compares it with the average range of the previous five days. A positive signal is generated whenever today’s range is higher than the previous five-day average. This suggests that buyers are willing to pay more for the stock than they did during the last five days and shows a positive trend.
On-balance volume (OBV) is used to detect momentum. Volume should keep pace with price; each $1 rise in price should be accompanied by a commensurate rise in volume. A rise in price on lesser volume would suggest a negative signal for the stock.
What did we find?
We found just three of eleven stocks that satisfy all four criteria (CVS, Mondelez and Walgreen) and only one (Colgate-Palmolive) that had three positive readings, suggesting a negative bias for this sector at this time. In the adjoining table we summarize our findings.
Ron Meisels is the Director of Research and Monica Rizk is the senior Technical Analyst for Phases & Cycles Inc. (www.phases-cycles.com). They may hold shares in companies profiled.