Falling Prices for Food Stocks
With many major consumer staples stocks like Campbell Soup (NYSE: CPB) and Coca-Cola (NYSE: KO) pulling back for a second, third or even fourth day in a row, there is no more denying the fact that profit-taking has taken over the market for “safety stocks”.
The exodus from safety has been seen elsewhere in the stock market, as utilities shares that had made major gains in recent weeks and months came under profit-taking in the first trading days of 2012. And with financials bid higher over the course of the week, investors are shifting from the “can’t miss” world of dividend-paying consumer staples stocks to the “can’t get worse” world of the banks.
Read more about our take on how to believe in the banks again here.
Heading into trading on Friday, food stocks like Hormel Foods (NYSE: HRL) and Dean Foods (NYSE: DF) in particular are dropping into technically oversold territory and finishing at fresh, short-term lows. Shares of Dean Foods have earned “consider buying” ratings of 8 out of 10 ahead of Friday’s session. The stock also has a positive, short-term edge of more than 1%. Hormel will require additional selling in order to boost the stock’s “neutral” 6 out of 10 rating and positive edge of less than a quarter of a percent.
For its part, the sector ETF, the Consumer Staples Select Sector SPDRS ETF (NYSE: XLP) has now closed lower for four consecutive trading days, the last two in technically oversold territory above the 200-day moving average. Historically, pullbacks of this kind in XLP and other sector exchange-traded funds have tended to encourage traders to enter the market as buyers in the short term.
Can’t get enough stocks? Click here for more!
David Penn is Editor in Chief of TradingMarkets.com.