Wobbly Weightings:
Live by the sword and die by the sword. The XLY was hit to the tune of 1.95% Monday, and one is witnessing what occurs when their is a hefty weighting at the top of an ETF. The XLY has benefitted generously as AMZN makes up more than 20% of the fund, and Monday it entered into bear market territory down 20% from most recent all time highs. It ran into trouble with a double top near the very round 2000 figure in September and October (a bearish engulfing candle on 9/5 and a doji on 9/28 were fair warning). Today it undercut its 200 day SMA for the second time, previously did so on 10/26, and prior to that it was a line that was not breached in years. A negative trend change on the weekly chart below could be underway, as the bullish RSI zone threshold of 50 was resistance last week, which was comforting dating back to 2016. Former support becoming resistance is not a bullish development.
Leaderboard Laggards:
As like many groups the consumer discretionary names are very diverse. Homebuilding stocks are within the space, and as bad as they have been perhaps a small glimmer of hope is the rebuilding efforts that will take place following the ongoing tragedy in California. Amazingly the ITB is 34% off its most recent 52 week highs and has lost ground 28 of the last 42 weeks, but its chart seems to be making a stand at the round 30 number, but I would not put capital into the group here. Furthermore I thought it was a bit frothy to see names like REV, more than doubling since the week ending 8/10, actually RISING fractionally Monday. I am purely a technical analyst but I believe the stock has undergone TWO reverse stock splits. Another name that took me aback today was KODK, up very strongly after an asset sale was announced. Of course this means little, but the message it speaks when names like these are on the leaderboard add to the ongoing negative narrative.
Examples:
The footwear group does continue to hold up well for the most part. We know NKE has been in the news recently with its ad campaign and the stock is now 13% off most recent highs but did fill in a gap on 10/23 from the 6/28 session. Its European competitor ADDYY also filled in a gap on 10/11 from 8/8. DECK, often a holiday favorite, sits just 3% off its most recent all time highs and is extended from a breakout above a double bottom trigger of 119.72 taken out on 10/29. Below is the chart of SCVL and how it appeared in our Consumer Report from 11/1. Today it attempted to make a push toward its cup base trigger of 45.10, but reversed with the fragile tape. Still give it credit for hanging in there and during October it fractionally moved below its 50 day SMA, when the vast majority of stocks were having trouble holding onto to their 200 day SMAs. If markets can regain their footing, pun intended, this name should be just fine.