Defensive Sectors Hit Hard

After leading the market through the month of May, defensive stock sectors are selling off aggressively this week. Monday saw the health care SPDR (XLV) gap down from last week’s level on heavy volume. Today we had a similar high volume drop in the consumer staples (XLP). This came as the Goldman buy call on commodities pumped up those parts of the market.

Is this the beginning of a rotation back out of defensive and into aggressive positioning? Not sure I buy it. Those markets had gotten pretty extended, and it wasn’t much of a pullback. My take is that there is likely more selling to come in the commodities (subject to revision, as always, upon any geopolitical blowup).

I am long both XLP and XLV, and will now have them on a very short leash.

(click on charts to enlarge)

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s