Consumer staples continue to outperform again today, indicative of a rotation into the more defensive areas of the market after the recent risk-on rally. Into the FOMC announcement momentarily, we can see the daily chart below for the staples’ ETF has developed an exceptionally steep angle of ascent.
Very strong, indeed. However, I expect this steep angle to correct itself soon. It will be interesting to see where the capital rotates to out of the staples. Bulls, of course, will argue that capital will simply rotate back into the small caps and high beta areas for a further push higher.
Either way, I expect the usual post-Fed uptick in volatility this afternoon. Stay alert and don’t overtrade.
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