Group Overview:

The discretionary group has lagged on both a one and three month time frame, and in each case it was just the eight best performer of the 11 major S&P sectors. Problems with the XLY began to surface after it was unable to break above a bullish 3 week tight pattern, at all time highs, the weeks ending between 9/14-28 (they all CLOSED remarkably taut to one another within just .30). The week ending 10/5 registered a bearish engulfing candle that slipped more than 4%, and the ETF saw follow through from there falling another 8.1% the next 3 weeks. Volume was very elevated during the time period, and the 11/20 session undercut the low made on 10/29. To its defense the XLY did reverse near the very round par figure last Tuesday, and that was noteworthy as since breaking above the 100 number the first week of the year it has not CLOSED below it. Consider that level your line in the sand.

Earnings Bifurcation:

Earnings from retail stocks have been all over the map, with many disappointing. There were some nice winners most notably FL which romped higher by nearly 15% on 11/21. It is carving the right side of a potential cup base nicely as it looks to continue its current four week winning streak. GOOS rose 10% on 11/14, but CLOSED well off intraday highs, and my thoughts are directly below. URBN rose nearly 3% on 11/20, but that name is still lower by 30% off its most recent 52 week highs. But there have been some notable blunders, especially in the discount arena. TGT dropped more than 11% on 11/20, ROST lost more than 9.4% the same session. KSS declined more than 9% on 11/20 too. BURL reports earnings on Wednesday before the open and it is well below a double bottom trigger of 166.94 that was originally taken out on 10/25. More releases come from luxury names like TIF and LULU in the coming days and both happen to be 25% off most recent all time highs. 


On Mondays robust tape, the shareholders of casual diners were feeling a bit of indigestion, pun intended. Many in the space actually FELL today including old best of breed names like BJRI which slumped more than 4%, and extending losses following a bearish head and shoulders breakdown below the round 60 number. CAKE recorded a bearish engulfing candle CLOSING under the very round 50 number and losing nearly 4% or more three of the last 10 sessions. Below is the chart of TXRH and how it was profiled in our Consumer Report from 11/20. The stock is now 16% off most recent 52 week highs and trade has become very wide and loose, a hallmark bearish characteristic. It recorded a bearish engulfing candle the day after filling a gap to the upside on 11/12 and today finished below its 200 day SMA. Pepto Bismol may be on the menu soon.

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