Last time we wrote about Consumer Staples we told you that we would be looking for strong gains, but so far the sector has stayed inside its wedge formation. We have seen a gain up to the top of the range and then a fall and a gain of about 3% since the February Sector Spotlight so this has been a decent trade so far. However, now we are getting to a point of more risk with the end of this pattern.

Here is the situation. The Consumer Staples sector has been in the wedge pattern that you can see marked on the chart below for the last few years. Most wedge patterns end with a sudden and violent movement (relative to recent movements) either much higher or much lower. Since this is a rising wedge, we feel that the most likely scenario would be that it will reach the resistance line again (upper red line) and then fall back and break through the support line.

We would recommend exiting this sector when the index reaches 241 again. This should be within the next few weeks. If it doesn't ever reach that again, you should get out at 235. Of course, if you are willing to take the risk, there is a possibility that it will break out above the wedge formation and head even higher then the upper red line. Some of the more popular stocks in this sector are Procter & Gamble Co. (PG), PepsiCo Inc. (PEP), Kroger Co. (KR), and Wal-Mart Stores Inc. (WMT).

Price Headley is the founder and chief analyst of BigTrends.com.