The S&P 500 (^GSPC) is up about 5.5% since Sept. 30. November is the start of the best six-month cycle for stocks and a month in which it has historically been rewarding to own cyclical sectors.

Those points may imply that animal spirits are high, but stodgy consumer staples stocks and the exchange traded funds that house them could be saying something different.  Of the four biggest contributors on a percentage basis to the S&P 500’s gains, last month, two were cyclical (technology and discretionary) while the other two were low beta plays (staples and health care). [Defensive Sectors Ruled in October]

The top two sectors in October were telecom and staples, indicating that although the S&P 500 continues to flirt with new highs, conservative sectors still hold appeal.  Out-performance by staples could be a sign a risk-off rally is in the process of starting.

“The relative chart of the Consumer Staples Select Sector SPDR (NYSEArca: XLP) versus the S&P 500 shows a base taking shape since the start of September. That bottom is activating today and providing it holds, implies outperformance for the remainder of the month. Additionally a medium-term relative downtrend channel has been defeated with recent strength as the defensive rotation strengthens,” said Tarquin Coe of Investors Intelligence.

Coe is bullish on several XLP holdings, including PepsiCo (NYSE: PEP), the world’s second-largest soft drink maker, tobacco giants Altria (NYSE: MO) and Philip Morris (NYSE: PM) and CVS Caremark (NYSE: CVS).

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