Well, there's another day of languishing market action. For a brief moment it looked like the S&P 500 was going to go ahead and make a run for the resistance levels around 2135 we've talked about a few times in recent editions. After having a few hours to digest disappointing job-growth numbers from ADP though, traders ended up letting the market slip back towards Tuesday's closing levels... and right back to several key moving average lines. I think today's action is another hint that we're ultimately going to have to head a little lower before we go any higher. I'll show you why in a moment. In the meantime, with not a lot else to do right now other than wait for a meaningful move from the market, let's go ahead and knock another one of our sector earnings-trend analysis out of the way. Today's guinea pig is the consumer staples sector, for a very specific reason. Consumer Staples Emerging as a (Temporary) Leader You may recall what got the ball rolling for our sector-driven analysis a couple weeks ago was that we noticed the utility sector was perking up out of a slump while every other sector was starting to hit a major headwind. This is still the case, and this is one of the reasons we still like utility stocks right now even though we're looking for all other sectors to struggle in August and September. Well, another sector has emerged as a near-term leader... consumer staples. It's up 4.3% since July 9th, when the broad market started what at the time looked like would be a major recovery - a rebound that ultimately fizzled. As our performance-comparison chart below now shows us though, the consumer staples sector (pink) is breaking higher, out of the pack. You can also see the utility sector (turquoise on our chart) continues to fight its way out of its slump from earlier in the year. In fact, since the end of June, staples and utilities have outperformed everything else. In the grand scheme of things, this isn't surprising. I think we mentioned to you at least once within the past two weeks how investors are starting to put their bearish-colored glasses on. While few (besides us) have noticed, they're starting to trade bearishly too; utilities and consumer staples are probably about as defensive of sectors as you'll ever find. Since this is a tacit insight into the current mindset of Mr. Market right now, I think we can already assume investors have it in their head that stocks are vulnerable and due a pullback from here. Now it's just a matter of figuring out exactly when the self-fulfilling prophecy will materialize. Whenever it happens though, I think we can take these hints at face value and assume these two defensive sectors will better resist the bearish tide...and maybe even thrive in it. In any case, since it's on our radar today, let's go ahead and dissect the staples sector's long-term earnings trend and valuation. Read 'em and weep. Folks, the consumer staples stocks have continued to forge ahead, but earnings have not. Earnings have pretty much stagnated for the group, which wouldn't even be so bad were it not for the trailing P/E of 21.2. Since when have staples stocks been worth that much? I know 2016 is supposed to be a turnaround year for the group, led by the turnaround effort from the quintessential consumer staples stock, Procter & Gamble (PG). I'll tell you what though - I don't see P&G doing nearly as well as it should after its recent streamlining efforts, nor do I see the group's earnings trend suddenly perking up again after being stuck in neutral for the past couple of years. As for what this means in light of what we said above, we still contend the consumer staples stocks are a decent place to be for the next few weeks for defensive purposes. That is, they may well keep going up while other stocks pull back. As for them being a worthy long-term holding though, I can't really recommend any of these names. Like I mentioned to you guys yesterday, this is why we're making these charts - to spot realities we may not otherwise see, or want to believe. By the way, though we're not big on consumer staples stocks right now, we were fans of technology stocks, as we pointed out in Tuesday's newsletter. Although we didn't have any stock picks at the time to pass along to you, we did mention the Elite Opportunity service usually seems to have a tech pick or two in its back pocket. Care to guess who made not one but two technology stock picks today? You got it - John Monroe over at the Elite Opportunity service. I can't divulge what they are, of course, but I can tell you both of them were long-term suggestions, and both of them aligned with our attractive bigger-picture earnings growth trend we discussed just a day ago. Maybe it's just a coincidence, or maybe not. Whatever the case, with two different people seeing the same basic thing independently of one another, it may be a hint worth taking. Oh, these were long-term picks from the EO, so if you want to know what they are, it's definitely not too late to get in. Your membership in the Elite Opportunity club gives you access to all the newsletter archives, so you could easily go back and poach these names. Here's how to learn more, or sign up. Or, cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/ In any case, I've got a feeling at least one those two trades, if not both of them, could turn out a lot like the Kite Pharma (KITE) trade, which John picked back and May 18th and has since watched it rally 66%. Still on the Fence (and settling in) You know, what was interesting about today was how the ADP payroll news was mostly on the disappointing end of the spectrum, factory orders were just so-so for June, and we learned June's construction spending was lackluster, yet somehow the market decided the odds of a rate hike sooner than later (as in September rather than December) were higher than they were yesterday. You read that right - the market is counting on rising rates sooner and/or bigger than initially figured despite the fact that there's no real inflation to speak of, even against a backdrop of plenty of reasons to be concerned about the market and the economy. Our chart below confirms it - the 30-year interest rate ticked back up to 2.94%, and treasuries pulled back accordingly. We can't really blame the U.S. dollar either, since it barely budged today. Even looking outside of the yield and bond price data though, the metrics are increasingly pointing to a September hike. The futures now say there's a 52% chance of a quarter-percent rate increase next month, up from 38% earlier in the week. I'm not sure what to make of it yet, but I will tell you I have far more faith in the collective conscious (and subconscious) of traders than I do any of the so-called pundits when it comes to making predictions. Or, think about it like this... if Yellen can get away with raising rates in September without killing the equity market, why wouldn't she? It's overdue. In fact, it may send a strong message of confidence in the economy at this point, which would do stocks a heck of a lot more good than cheap lending rates will at this point. In any case, about today's action, though the market closed a little higher and the VIX closed a little lower, the big intraday reversals largely confirm the bulls are just shooting blanks here. If they were serious, stocks would have held onto their intraday gains today... or at least most of them. As it is, today's peelback has implications of a reversal of the budding bounce effort and a renewal of the selling effort. Yes, I'm saying the bulls would have been better off not making such a high intraday high on Wednesday. They tipped their hand to the bears, so to speak, and it wasn't a very good hand. The VIX's brief dip below 11.8 and subsequent bounce back above it also says today was a potential bearish pivot point. Of course, the 200-day moving average line currently at 2072.7 is still THE line in the sand. Looks like the lower 20-day Bollinger band will be right there too by the time the S&P 500 can test it. Patience is the key at this time. It's all coming unglued - we just need to give it time.