Consumer staples stocks are supposed to be boring, and in the past five months they’ve certainly lived up to that reputation.

After roaring to a gain of almost 18% in the first four months of the year, the Consumer Staples SPDR (XLP) has been stuck in a sideways range. Since April 30, in fact, XLP is almost exactly flat with a total return of -0.5% — a time in which the broader U.S. market has gained 6.9%.

Looking under the surface, many individual stocks have done much worse than simply flat-lining. A number of former winners have put in a series of lower highs since the beginning of May and have lost over 5% in the process. Among these: Traditionally stable names including Coca-Cola (KO, -5%), Phillip Morris International (PM, -6.7%), Kimberly-Clark (KMB, -6.6%) and Kellogg (K, -7.9%).

Live by the Safety Trade, Die by the Safety Trade

This underperformance hasn’t occurred in a vacuum. The catalyst for the end of consumer staples’ former dominance was the rise in bond yields that began in early May. Since that time, the stocks previously seen as being yield/safety plays have fallen upon hard times. Utilities, dividend stocks and low-volatility ETFs have all lagged, while higher-beta plays like Tesla (TSLA) and Netflix (NFLX) have risen to the top of the performance charts.

In this sense, the consumer staples sector is just one of many areas to be caught in the crossfire. But even now, with bond yields having fallen for the past two weeks, most stocks in the group still haven’t been able to gain any traction.

One reason for this is that the relatively modest downturn has done little to correct the high valuations in the sector. According to Standard & Poor’s, large-cap consumer staples shares continue to trade at a premium multiple to the broader market (15.6 vs. 13.4 on 2014 estimates) despite their below-average earnings growth prospects (10.1% vs. 11.1%). This puts the sector at a 25% premium based on PEG (price/earnings to growth), 1.5 to 1.2.

The takeaway: There’s still room plenty of room for underperformance unless the safety trade returns.

A Shaky Technical Picture

Could matters indeed get worse for the staples sector before they get better? Quite possibly, if the charts are any indication.

The five months of sideways movement has created a tight channel for XLP, with support at $39 and resistance at $42. The ETF is currently below the midpoint of the range after its $40.23 close on Friday, but this isn’t the only factor worth watching. Note also that XLP has moved below its 50-day moving average and is approaching its 200-day at $39.43 — signaling that the sector is moving fairly close to a breakdown point.

This might not necessarily come to fruition — especially if news out of Washington surprises to the upside — but it’s a clear reference point for anyone who is long in this sector.

Two stalwart staples names might hold the key to XLP’s ability to hold the line: Procter & Gamble (PG) and PepsiCo (PEP). Both are holding above support, but they’re also displaying lower highs and proximity to both key lower support lines and their 200-day moving averages, which leaves little margin for error:

The Bottom Line

In combination with the still-lofty valuations in the sector, these charts represent a reason for near-term caution. Ultimately, consumer staples stocks will offer an opportunity to investors if 1) some of the valuation premium evaporates or 2) investors to reassess the value of safety.

But until something changes, consumer staples looks to be dead money.

As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.