Sector Drill-Down: One Surprising Poor Performer

Given the market's recent foray into a record-high territory, it would be easy to presume every sector's and every industry's stocks are at least making some sort of forward progress. That presumption would be wrong, however. Amazingly enough (and despite the demand created by the coronavirus contagion), household products stocks are struggling. After a runup through August, they've been strangely vulnerable to pullbacks. As of Wednesday, these names are back to where they were in late August. The S&P 500 is up nearly 7% for the same timeframe. Perhaps worse, household products stocks started to wave a big red flag this week.

The daily chart of household product stocks paints a simple enough picture. These names broke under their 20-day and 50-day moving average line on Monday, finally dragging the 20-day line under the 50-day line. This is the first time we've seen this since March. A close look at the chart suggests, in fact, that these names are finding technical resistance at these now-converged moving average lines.

You can thank Clorox (CLX) for most of this weakness. While the company couldn't make enough of its product in the height of the pandemic's early panic, investors have been wading out of that strategic trade since August... easing out pretty indiscriminately. This particular name broke back under its 200-day moving average line this week. The second time we see this sort of action, the sellers are pretty serious. You'll also notice that Clorox shares seemed to find a technical ceiling at their key moving average lines each time the bulls did try to stage a rebound since September. That's a hint that more than a handful of people have their finger on the "sell" button, and that the buying conviction was never that great to begin with. Go figure.

Church & Dwight (CHD) - the company behind Arm & Hammer, Oxi-Clean, Xtra laundry detergent, and Kaboom multi-purpose cleaner - is helping send the group lower as well.

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