Group Outlook:

The consumer discretionary names are joined at the hip with technology as sectors that are most sought after to lead. If either or both are under distress that is very rarely a good sign. The XRT is now in correction mode, off 11% from recent 52 week highs, and it was not long ago how many were talking glowingly about the ETF. I was among them as as it broke above a 51.14 cup base trigger on 8/14, but it failed quickly and we all know the best breakouts tend to work right away. We spoke of a possible double whammy with the fund, as many of its components are small caps and we know the Russell 2000 has imploded. The XRT is lower by 2% this week, and if it holds would be its first 4 week losing streak since March of 2017. Best of breed names like BURL have risen just 8 days since the beginning of September, and when you have frothy names like JCP showing up on the leaderboard, one has to know something is going on. To no ones surprise Sears filed for bankruptcy today as well.

Weak Individual Stock Performance:

Was the recent good action in the retail plays, after rebounding from a prior “Amazoned” slump, just a dead cat bounce? Well perhaps some names can feel some consolation as AMZN itself is starting to show cracks as it sits in correction mode, 13% off most recent all time highs. It did have issues with the very round 2000 figure as it was able to just muster two 3 day streaks CLOSING above the round number on 8/30-9/4 and 9/27-10/1. Even more concerning is that it CLOSED in the lower half of its daily range the last 9 sessions and it is comfortably below its 50 day SMA. On the chart below of LE, ANF, ETH, PVH, SFLY and TPR all at one time recently respected names, we can see how in the beginning of 2018, many of the names were ascending, and looking further right one can see the descent since summer time. SFLY alone is off 41% from its most recent 52 week highs, which not surprisingly reversed at the very round par number on 6/5.

Examples:

It has been very tough for bulls for sure as of late. To me the sentiment in this market is very bearish, and it became so in a very rapid fashion. Overall it should come as no surprise as the semiconductor and software names tipped off some foreshadowing. The tone now is certainly a sell the rally instead of buy the dip strategy. Getting back to consumer chatter below is the chart of a recent IPO BJ and how it was presented in our Consumer Report from 10/3. It is a good illustration of why number one, you demand CLOSING prices above your triggers. The stock looked as if it was trying to gather itself near a former cup base breakout trigger, and it did not deviate to far from undercutting its 50 day SMA. The 27.35 pivot was not crosses intraday or on a close so nothing should have been done, and those who attempted to front run the idea are now staring a large loss in the face. The chart is technically damaged and now is a no touch until a new base emerges which could be months if not longer away. In another words there are better fish to fry.