NEW BULLISH Plays

Consumer Staples ETF - XLP - close: 42.57 change: +0.55

Stop Loss: 40.75
Target(s): 47.50
Current Gain/Loss: unopened

Entry on October -- at $--.--
Listed on October 28, 2013
Time Frame: 9 to 12 weeks
Average Daily Volume = 7.0 million
New Positions: Yes, see below

Company Description

Why We Like It:
The XLP is an exchange traded fund (ETF) that mimics the Consumer Staples Select Sector Index. The index tracks companies in the retail food & staples, household products, food products, beverages, tobacco, and personal products industries. If the last few weeks are any indication then investors could be turning more defensive. Consumer staples tend to be less economically sensitive because they are "must have" items. Check out the weekly chart below and you'll notice that the XLP is up four weeks in a row.

On a short-term basis the XLP just broke out past major resistance near the $42.00 level. This is a new all-time high and is a significant breakout from a six-month trading range. Volume today was 33 million shares. Normal volume is only seven million shares.

I am suggesting a trigger to open bullish positions at $42.75. More nimble traders may want to wait and see if the XLP will dip back toward the $42.25-42.00 area instead and launch positions there. Broken resistance near $42.00 should be new support. I am suggesting a stop loss at $40.75. Our long-term target is $47.50.

Trigger @ 42.75

Suggested Position: buy the XLP @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the 2014 Jan $43 call (XLP1418a43) current ask $0.65

Annotated chart:

Weekly chart: