The consumer services sector, which comprises companies that distribute food, drugs, general retail items, and media, is often overlooked by active traders in favor of more lucrative segments. However, as you'll find in the charts discussed below, nearby support levels are suggesting that now could be the ideal time to buy from a risk/reward standpoint.
iShares U.S. Consumer Services ETF (IYC)
Retail traders looking to gain targeted exposure to a niche market segment such as consumer services often turn to exchange-traded products such as the iShares Consumer Services ETF (IYC). As you can see from the chart below, the price of the fund has trended steadily higher for most of 2019.
Followers of technical analysis will want to note how the price has bounced off of the combined support of the dotted trendline and the 200-day moving average on each attempted sell-off. Based on previous price action, traders would expect this uptrend to continue. As confirmation, traders will likely look to the moving average convergence divergence (MACD) indicator, which recently crossed above its signal line, which is a common technical buy sign. From a risk management perspective, stop-loss orders will most likely be placed below $209.12 in case of a sudden shift in fundamentals or market sentiment.
Comcast Corporation (CMCSA)
One of the top holdings of the IYC ETF that traders may want to watch over the days ahead is Comcast Corporation (CMCSA). As you can see from the chart, the price is trading near an ascending trendline that looks similar to the one shown above.
The bullish price action over the past few sessions suggests that the support near $44.50 is stronger than many expect, and many traders are now anticipating that it could be strong enough to propel prices beyond the summer high of $47.05. As discussed above, active traders will likely look to the recent bullish crossover between the MACD and its signal line to confirm the move higher. Stop-losses will likely be set below the dotted trendline or the 200-day moving average ($41.20), depending on risk tolerance and investment horizon.
The Home Depot, Inc. (HD)
The Home Depot, Inc. (HD) is another top holding of the IYC ETF that is currently exhibiting signs of a strong move higher. As you'll see in the chart below, the price has been trading within an established uptrend since the start of 2019, but it has recently broke above its recent swing high, which could suggest that we are in the early stages of another leg higher. Stop-loss orders will likely be placed below the 50-day moving average, dotted trendline, or 200-day moving average ($200.19), depending on risk tolerance.
The Bottom Line
The consumer services sector is often overlooked in favor of more lucrative market segments. However, as discussed above, nearby trendlines and bullish crossovers between the MACD indicator and its signal line suggest that prices could be headed higher over the days and weeks to come.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.