XLP Defensive Bounce

The Consumer Staples Select Sector SPDR Fund XLP is exhibiting a classic defensive bounce setup. Based on the trend lines, XLP successfully defended a critical support confluence and is now attempting to break out of its short-term downtrend.


The price recently fell hard into the intersection of the Horizontal Green Support Line and the Ascending Blue Trend Line. This confluence proved successful, forcing a strong bounce back.

XLP could be now challenging the Descending Red Trend Line. This line has dictated the short-term bearish trajectory since the highs.

The successful bounce is a signal that while growth sectors are selling off, investors are rotating into defensive positions (staples stocks are known for low volatility and stable dividends during uncertain economic times)