CFDs & spread bets are complex instruments & come with a high risk of losing money rapidly due to leverage. 73% of Retail investor accounts lose money when trading CFDs & spread bets with this provider. You should consider whether you understand how CFDs work & whether you can afford to take the high risk of losing your money.
Asset Watch
Tuesday, August 16 2022
Prophecies of a new bull market continue to gain steam, as the S&P 500 recorded another ferocious rally on Aug. 12. Moreover, with the U.S. equity benchmark up by more than 11% over the last month, some have their eyes on new all-time highs. Sam Stovall, Chief Investment Strategist at CFRA, said a new bull market could be upon us.
“This remains a bear market rally until we close above the 4,232 level on the S&P,” Stovall said. “After that, history reminds us that no bear market ever recovered 50% of its decline only to set an even lower low.” Investors have been increasingly optimistic since the S&P 500 achieved this milestone on Aug. 12.
However, since asset prices don’t move in a straight line, could the Consumer Staples Select Sector SPDR Fund (XLP) – the largest consumer staples ETF in the world – offer a solid risk-reward proposition?
Source: TradingView
The defensive staples sector has been the second-worst performer over the last month. However, during the S&P 500’s June and July selloffs, the XLP ETF materially outperformed and often rallied while the S&P 500 declined. Therefore, if another bout of volatility strikes, consumer staples could provide immense protection.
On the flip side, the XLP ETF’s underperformance over the last month sets the stage for some mean reversion. But if the S&P 500 continues its ascent, consumer staples may rally more to make up the lost ground.
So, is boring a solid bet?
Sources:
S&P 500 sector performance:
Stovall quote:
ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.
CFDs and Spreadbets are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of Retail investor accounts lose money when trading CFDs and Spread Bets with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
ADSS is a trading name of ADS Securities London Limited, a company registered in England and Wales with company number 07785265 (VAT Registration Number: 212722447). Registered address 9th Floor, 125 Old Broad Street, London, EC2N 1AR. ADS Securities London Limited is authorised and regulated in the UK by the Financial Conduct Authority (FRN 577453).
The information on this site is not directed at residents of the United States, Canada, EU or any particular country outside the UK, and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law.
All opinions, news, analysis, prices or other information contained on this website are provided as general market commentary and does not constitute investment advice, nor a solicitation or recommendation for you to buy or sell any over-the-counter product or other financial instrument. Please ensure you understand all risks and seek independent advice if necessary.
