Data &
Technology
Research
Reports
Report Solutions
Reports Library
Actionable
Strategies
Free
Resources
Simple Backtest Calculator
Simple Seasonality Calculator
The Kelly Criterion Calculator
Sentiment Geo Map
Public Research Reports
Free Webinar
Pricing
Company
About
Meet Our Team
In the News
Testimonials
Client Success Stories
Contact
Log inLoginSign up
< BACK TO ALL REPORTS

When it's time to switch into Consumer Staples

Jason Goepfert
2021-04-19
Over time, there has been an edge in switching between consumer staples and consumer discretionary sectors based on the rate of inflation.

From Jay...

One of the never-ending tug-of-war battles in the market is that between the consumer staples and consumer discretionary sectors. The theory is that in stable times consumers will splurge on "wants" which should pump up discretionary stocks. On the other hand, during more troubled times consumers will focus on "needs" which should be a boost for staples stocks. 

One factor that few investors take into consideration when allocating between the two is inflation. As it turns out, such analysis may offer an edge. To illustrate this point, let's focus on a strategy that looks solely at inflation to decide whether to be in the staples or discretionary sectors.

The chart below shows the relative performance of consumer staples versus consumer discretionary ONLY when inflation was very high.

Consumer staples vs discretionary based on inflation

There are many factors that can influence the relationship between staples and discretionary sectors.  Still, it appears that factoring inflation into the equation may offer investors an important - and little-recognized - potential edge.

Stat Box

With another round of big up days, the S&P 500 has enjoyed 32 more days with a 1% gain than a 1% loss over the past year. This is a record number dating back to 1926.


What else we're looking at

  • A more in-depth look at performance in staples and discretionary depending on inflation levels
  • Defining a risk-off signal based on trends and breadth, and where it stands right now
  • What happens when gold first crosses above its medium-term moving average
  • The "smart money" is nearing a record short in one commodity market
DATA &
TECHnologies
IndicatorEdge
‍
BackTestEdge
‍
Other Tools
‍
DataEdge API
RESEARCH
reports
Research Solution
‍
Reports Library
‍
actionable
Strategies
Trading Strategies
‍
Smart Stock Scanner
‍
FREE
RESOUrCES
Simple Backtest
Calculator
Simple Seasonality
Calculator
The Kelly Criterion
Calculator
Sentiment Geo Map
‍
Public Research Reports
‍
Free Webinar
COMPANY
‍
About
‍
Meet our Team
‍
In the News
‍
Testimonials
‍
Client Success Stories
Pricing
Bundle pricing
‍
Announcements
‍
FAQ
© 2024 Sundial Capital Research Inc. All rights reserved.
Setsail Marketing
TermsPrivacyAffiliate Program
Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Testimonial Disclosure: Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.