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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.


* If the dots don't connect, gather more dots until they do...or, just follow the $$$...





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Monday, March 07, 2022

The Correlation Among Consumer Staples, Commodities And Agriculture Sectors

Following the bottoming of the 2008/09 U.S. financial crisis in March of 2009, the Consumer Staples ETF, XLP, began a years-long rally, along with the Commodities and Agricultural ETFs, DBC and DBA, respectively, as shown on the following monthly comparison chart.

While XLP has been on a slow, steady climb ever since, DBC and DBA began to diverge in a volatile and whippy descent in early 2011 and finally bottomed around late Q1 to early Q2 of 2020...then, reversed shortly after the WHO declared the COVID-19 virus a pandemic in March 2020).

DBC and DBA have been in an ever-steepening rally, ever since...likely accelerated most recently by Russia's declaration of war against and invasion of Ukraine.

As long as uncertainty exists around this war, as well as the after-effects of COVID, which have contributed to a spike in inflation, labour shortages, and supply-chain problems, I'd posit that all three ETFs will continue to rise.

However, a divergence in one or more may signal, either a pause and consolidation in these sectors for a period of time, or a reversal...so keep an eye on them for directional clues and trend strength, along with the information contained in my post of February 27 pertaining to U.S. Major Sectors and the SPX.