Is XLP (Consumer Staples SPDR ETF) Sending Investors a Warning?

One more SPY sector chart set-up to be aware of is XLP (Consumer Staples), which we could make the case is developing a 6 month distribution top formation. For a sector that is supposed to represent defensive, cash n' carry, "recession-proof" businesses, a topping formation reflects a risk-on, possibly excessively optimistic view of business conditions and the economy that is sucking capital out of XLP.

That said, more to the point, our eyes should be focused on the more recent July-Aug. rally peaks at 55.87 and 55.94, which must be hurdled and sustained to neutralize the threat of the developing larger top formation. As long as the 55.87/94 resistance zone remains intact, XLP will be vulnerable to cracking beneath key near term support at 54.94/98, which will trigger additional weakness that points to a test of the up-sloping 200 DMA, now at 54.10.

8 21 17 XLP Day GIF
8 21 17 XLP Day GIF

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