Sunday, October 12, 2014

PG Procter & Gamble Weekly Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence

Traders are tripping over each other buying consumer staples stocks for perceived safety and protection against an economic and market downturn. After all, no matter how bad things get, you need food, soap, laundry detergent, toothpaste, shaving cream, personal hygiene products and toilet paper. PG is the king of consumer staples. If the consumer staples sector is mentioned you immediately think of PG. The economic and market cycles are messed up due to the near six years of Fed and other central banker intervention. Therefore, the consumer staples stocks including PG are goosed to obscene bubble-type levels just like the broader market. In a normal market, the staples stocks would be weak now. The normal rotation would take place where momo stocks, small caps and tech stocks, that ran higher for the rally phase, are exited and the safer stocks such as staples, blue-chip dividend stocks, REIT's and utilities are entered.

The blue channel is in play and price is now above the top rail in a throw-over move like the end of last year. The higher highs in price and red rising wedge is more important. The red lines show negative divergence and the stochastics are overbot. The chart is consistent with a stock topping out and expected to roll over. The pink box shows how the upside move was a very strong trend with the ADX above 20 during 2013. Not anymore. The strong upside trend has petered out. The small green circle shows the two long candlestick upper shadows over the last three weeks which may serve as a Tweezer Top identifying the trend change lower. PG may hold on for a few days or week or three but the chart is very bearish and sideways to sideways lower is the path forward for weeks and months ahead. In addition, the collapses from rising wedges can be quite dramatic so a quick flush to the moving averages at 80-82 is easily in the cards and lower.

The consumer staples stocks will be interesting to watch as folks trip over each other to buy each thinking they are smarter than the other guy. In fact, all are running towards what they perceive as safety and instead are going to get their heads handed to them. Aunt Edna is not concerned. She just took her entire life savings and bought PG at last week's highs. She said the guy on television said that was the best thing to do. Edna whistles a happy tune as she takes the afternoon walk today deciding on a different route that takes her past the local graveyard.

XLP is an ETF for playing the consumers staples sector. Reference the previous charts this morning for further study on this sector. If viewing this chart months forward, type 'XLP'  and 'XLY' into the search box at the right margin to bring up the additional charts.

Projection is for PG to top out at anytime over the next month and move lower for the weeks and months ahead despite its attractiveness as a perceived safety play. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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