Forget Tech, Follow the Money Into This Hot Sector

Some of the hottest names in tech are cooling down. Nvidia NVDA, which has gained over 140% this year, has formed a small double top (shaded yellow). This bearish pattern indicates that the Santa Clara-based tech titan could soon fall below its 50-day moving average (blue).

Super Micro Computer SMCI, which has gained over 180% this year, is in danger of breaking down from a symmetrical triangle pattern (dotted lines). The San Jose-based provider of storage and servers is faltering despite its coming addition to the Nasdaq 100, scheduled for July 22.

SMCI has struggled since reaching an all-time high in March.

Super Micro Computer Inc. (SMCI). Chart via Tradingview.

Meanwhile, consumer staples stocks, represented below by the SPDR Select Consumer Staples Fund XLP, closed at a two-month high on Wednesday. The bellwether consumer ETF broke out of a symmetrical triangle on its heaviest volume in two months (arrow).

SPDR Consumer Staples Select Fund (XLP). Chart via Tradingview.

Tech stocks are taking a breather after carrying this market for the past two years. While names like Nvidia and Super Micro Computers are seeing profit taking, capital is rotating into more mundane areas like consumer staples and transportation stocks.

While consumer staples stocks are strong overall, there are wide disparities within this sector.

Here are the best names to own in the consumer staples sector right now:

Walmart

While large-cap tech stole the spotlight in the first half of this year, shares of retail giant Walmart WMT quietly gained 33%. The stock has been trending steadily higher since December.

In addition to being the world’s largest brick-and-mortar retailer, Walmart has recently made significant strides in online sales. In May, the Bentonville, Arkansas-based giant reported a 22% increase in global online sales, with plenty of room to grow.

GRADE: B+

Coca-Cola

Shares of Atlanta-based soft drink giant Coca-Cola KO closed at a 52-week high on Wednesday, as stock broke out of an ascending triangle pattern (dotted lines).

While Coca-Cola’s chart looks refreshing, the stock still has to deal with significant overhead resistance in the $67 area. Coke is scheduled to report earnings on July 23.

GRADE: B

Colgate-Palmolive

Whether the U.S. economy experiences a hard landing, a soft landing, or no landing at all, the chart of Colgate-Palmolive CL demonstrates that consumers will continue to buy toothpaste, detergent, and other consumer products.

On Wednesday, Colgate-Palmolive closed at an all-time high. The stock’s steady trend has provided shareholders with a 23% year-to-date gain.

GRADE: B+

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At the time of publication, Ponsi was long WMT.