The consumer staples sector closed on Friday May 2, 2008 at $171.03.

The high over the last year was $211.22 on July 18, 2007 and the low was $156.77 on March 17, 2008. From the peak to the trough that represents a drop of - 24.5% for the consumer staples sector vs. the TSX, which dropped – 11.2% and the S&P 500, which dropped –17.4%. Since March 17th the TSX and S&P 500 are both up over 10% while the consumer staples sector is up 7.2%. Although this sector has lagged the broader market don’t lose hope, especially during a slowdown.

The chart suggests that we could be seeing a more positive trend. The current price crossed the 50-day moving average on April 30, which is one positive signal. Since March we have seen the start of an upward channel forming and if the current price can break through the next point of resistance of $173, which is not far off, maybe the worst is behind us in this sector.

Some of the Canadian companies you may recognize in this sector are Loblaw Companies Limited, Maple Leaf Foods Inc., Rothmans Inc., Saputo Inc., and Shoppers Drug Mart Corporation. Typically during an economic slowdown or recession companies like this hold up well because everyone needs food and drugs.

The other day I went to buy frozen blueberries and the price of a bag was over $17 vs. $13, about a month ago. Wow, that’s a 40% increase! So what did I do? Bought frozen strawberries for about $8. Is this a sign of things to come? The only question in my mind is how will rising food prices factor into profits for grocery stores?

The Consumer discretionary sector closed on Friday April 25, 2008 at $101.07.

The high over the last year was 130.71 on July 18, 2007 and the low was 98.57 on March 3, 2008. From the peak on July 18, 2007 to the trough on March 3, 2008, the consumer discretionary sector dropped over 24% compared to the TSX, which only dropped a little over 6%, and the S&P 500, which dropped almost 14%.

Why such significant under-performance? The markets are always forward looking and with all this talk of a recession, one can only surmise people anticipating cutbacks in spending on the consumer discretionary front. Historically markets have fallen in the six months preceding a recession.

The charts are not giving any different insight or reason to be bullish in this sector. Despite the current price recently crossing the 50-day moving average, it does not appear to be forming any significant new trend.

Some familiar names in this sector are Aeroplan Income fund, Astral Media, Ballard power Systems, Canadian Tire Corporation Limited, CanWest Global Communications Corp.

The Industrials sector closed at $113.12 on Friday April 21, 2008.

In the last year, the high was $128.53 on July 18, 2007 and the low occurred on January 22, 2008 at $91.22. The drop in price from the peak to the trough was –25%, which represents about a 10% under performance relative to the TSX and the S&P 500.

In the last 3 months resistance has been at about $114 represented by the upper line and support has been rising represented by the lower line. A move through $114 signals a potential buying opportunity and more upside while the last significant support is at about $102. Could this be the break in resistance for Industrials to really get moving?

Some companies, you may be familiar with that make up the Industrial sub indices are BFI Canada Income Fund, Bombardier Inc., CAE Inc., Canadian National Railway Company and Canadian Pacific Railway Limited.

The materials sector closed at 380.37 on Friday April 11, 2008.

The high over the last year was 399.65 on March 14, 2008 and the low was 262.49 on August 16, 2007.

The materials sector has outperformed the TSX by over 40% and the S&P 500 by over 50% in the last year. The materials sector is exhibiting a classic upward channel with the current price above the 50-day and 200-day moving averages more often than not. Both the 50-day and 200-day moving averages are trending up suggesting a continuing bullish outlook.

Given that the materials index is made up of companies such as Barrick Gold, Agrium, Agnico-Eagle Mines and Fording Canadian Coal (which are primarily agriculture, metals and mining resources), we expect this trend to continue. Worldwide demand should remain strong given the emergence of a growing class of wealth and infrastructure development in countries like
China and India.

This article is for information purposes only. It is recommended that individuals consult with a financial advisor before acting on any information contained in this article. The opinions stated are not necessarily those of Scotia Capital Inc. or The Bank of Nova Scotia.
ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF.