How Many Traders Saw This?

Hey, Ross here:

Tech’s selloff dominated the headlines last week.

But elsewhere in the market, one sector was back at a level that had stopped its rallies before.

Take a look at what changed.

Chart of the Day

This chart shows XLP, the consumer staples ETF.

Think groceries, drinks, and household goods. Things people keep buying even when the economy slows.

It’s considered a “defensive” sector – one that investors flock to when the market is in “risk off” mode.

The top half is XLP’s share price.

The gray band near $90 marks a resistance area where earlier rallies ran out of steam. The red arrows point to those failed attempts.

Now look at the green circle on the right.

After a sharp rally from its October low, XLP was back at that level by market close Thursday last week.

The bottom half shows how XLP is doing against the S&P 500. A rising line means staples are outperforming the index.

In the second green circle, that line has pushed above the red downward trend line.

So staples were rising in price AND gaining ground against the broader market.

And while XLP dipped a little on Friday…

Given how negative market sentiment is right now – especially among retail investors…

There is a good chance we might see XLP retest – and possibly break through – the resistance level.

And that leads us to a critical insight, which I explain below.

Insight of the Day

You don’t need an “aggressive” stock to make a strong return.

A lot of traders hear “defensive” and lose interest.

They want the fast-growing company. The new technology. Something with a huge future.

But you can miss good trades if you think a dull business must have a dull stock.

“Defensive” describes the business. People still need toothpaste and groceries when times get tough.

It doesn’t put a limit on what buyers will pay for its shares.

In fact, the same steady sales that seem boring during a tech boom…

Can become much more appealing when investors start worrying.

A boring business can turn into a hot stock when investors get nervous.

So when we see the “hot” trades sell off – like what’s been happening lately…

That’s when I shift my attention to some of these so-called “boring” sectors – like consumer staples…

And look for the big buyers.

Because while the biggest buyers of these companies’ products are your average Mom-and-Pop…

The biggest buyers of these companies’ stocks are the giant institutions who have no choice but to keep most of their capital in stocks (they’re simply not allowed to just “exit the market”).

That’s the buying I want to get ahead of…

So we can exploit their capital for our gain.

The challenge is spotting where that buying is building before the move is well underway.

I’ll reveal my strategy for doing exactly that tomorrow.

It’s an approach we’ve used to identify stock moves of 77% in 21 days, 51% in 15 days, and 87% in 24 hours.

So make sure you keep an eye out in your inbox for that.

In the meantime, if you missed my LIVE market breakdown on YouTube earlier this morning…

Click here to check out the replay now.

Customer Story of the Day

"Ross and the Traders Agency team are trustworthy.

I watched from the sidelines for several months, before joining. My wife was still skeptical after I signed up.

But now, after a month in, she sees the gains I am getting and she’s becoming much more optimistic.

This is important to me, because I have signed up for other services that didn’t work.

Ross’ strategy is the best (and most consistent) I have ever used.

I appreciate his straightforward approach to teaching. He’s clear and easy to understand.

I currently have The Insider Effect and Alpha Stocks. I am looking forward to the future, when I can also sign up for The Black Edge and Fire Traders.

Thank you Traders Agency for helping me and all the other “little guys” out there."

Embrace the surge,

Ross Givens