Karpel’s Corner: Traders Playing Defense

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

My old football coach used to say, “Defense wins Championships.” When I asked if I could play defensive he would say, “Not if you want to win a championship!”

The defensive sectors took the lead on Monday with the Consumer Staples ($XLP) and the Utilities ($XLU) hitting 52-week highs. Relative strength and upside leadership in these two sectors show a preference for the defensive end of the market. Health Care ($XLV) also hit a new high today. Even though the defensive sectors are leading, they are part of the broader market. Strength here helps out the major indices.

These defensive ETFs are extended and rally over 8 percent in October alone. But that does not mean that they cannot continue to challenge the upside.

See you next time at the Corner!