Procter & Gamble Primed for a Sizable Move
by Serge Berger | October 8, 2013 9:45 am
Procter & Gamble (PG[1]) is a well-known, stable consumer products manufacturer that offers a range of brands covering laundry and cleaning, paper, beauty care, food and beverages … and frankly isn’t the type of stock many traders look at. In fact, consumer staples in general — a “defensive” sector — doesn’t swing in too sexy a way for many traders.
But at the current juncture, I beg to differ.
The entire consumer discretionary sector — as measured by the Consumer Staples SPDR (XLP[2]) exchange-traded fund — has traded in a choppy trading range since topping out in May, where its steep first-half rally ended. After its latest test of the upper range of said trading range in mid-September, XLP turned lower again.
Now, over the past handful of trading days, XLP has curled up right near its rising 200-day simple moving average (red line).
If the XLP breaks below its 200-day MA, it has next support at $39, which is a little more than 1% away. That’s no biggie for sure, but it could have larger implications for Procter & Gamble stock.
Not too surprisingly, the daily chart of Procter & Gamble shows plenty of resemblance to that of the XLP. After falling from its mid-September high, PG stock quickly sliced through its 200-day MA, but has since chopped back and forth in an uncharacteristically tight range. During the past five trading days, PG has barely moved — and all of this is occurring below its 200-day MA, but right at a multimonth support level.
It’s an interesting spot for Procter & Gamble stock for sure, particularly because such a tight trading range has a high likelihood of leading to a relatively large move.
In which direction PG will move we do not know yet, but such tight trading ranges have a great track record of leading to good breakouts/breakdowns.
Serge Berger is the head trader and investment strategist for The Steady Trader[3]. Sign up for his free Weekly Market Outlook Video here[4]. As of this writing, he did not hold a position in any of the aforementioned securities.
- PG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PG
- XLP: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLP
- The Steady Trader: http://thesteadytrader.com/
- free Weekly Market Outlook Video here: http://www2.marketfy.com/l/15492/2013-05-06/4sf47
Source URL: https://investorplace.com/2013/10/procter-gamble-stock-ready-for-a-sizable-move/