Retail Overview:

The XRT rallied 3.3% last week, but that move paled in comparison to the S&P 500 rising by nearly 5%. One would have thought the ETF would have witnessed a more robust move. It did recapture the prior weeks decline of 3.4%, and it still looks heavy to me with plenty of distribution. The three heaviest volume weeks since the beginning of October, were losses of 5.3, 1.9 and 4.5% the weeks ending 10/5, 10/12 and 11/16. Give credit to its equal weightings near the top, as the 10 largest names comprise between 1.3-1.5% of the fund. FL looks solid as it carves out the right side of its cup base and WBA GAINED 10% in October. SBH even though it lost ground Monday, is still finding its groove above the very round 20 number and trying to keep pace with peer ULTA, and clearly outshining ELF. The latter is 48% off most recent 52 week highs, and has certainly been naughty and December which should be nice for it, pun intended, will most likely come up short. Some casual diners were left out in the cold with SHAK recording a bearish engulfing candle, and WING slipping more than 5% and shaping a bearish head and shoulders pattern with a rough neckline nearing the round 60 number.

Game On for Gaming Plays?:

There was solid leadership Monday as the markets rejoiced trade news over the weekend. Although energy captured the top spot, the number two and three gainers were technology and consumer discretionary. Looking within retail there was some bifurcation with toys being among the worst of the subsectors, and gaming being the firmest. Many names in the gambling group burst above their downward sloping 50 day SMAs, which could turn out to be trend changes, but let’s give that scenario time to play out. Stocks like WYNN and LVS jumped 9 and 6% respectively. One should tread with caution as they are off by 41 and 28% respectively from their 52 week highs, although WYNN and LVS did reverse near key round numbers off 100 and 50. The reason I want to be hesitant to turn bullish on them is because one day does not make a trend. Give it some time above the 50 day to prove the move was legitimate, as to be todays action looks eerily similar to TOL which screamed above its 50 day SMA after a well received earnings report on 8/21. The only problem was that is as high as it went. 

Examples:

One should always take note of solid relative strength, as well of weakness. The chart below of SBUX, and how it was presented in our 11/20 Consumer Report, is a good illustration of this point. It finished the month of October HIGHER from where it began, and that alone speaks volume. This is a chart of its daily chart, but if one were to peek at its weekly chart they would also see the powerful breakout above a double bottom trigger of 61.94 in a pattern that began the week ending 6/9/17 and broke above the week ending 11/2. The saying goes the longer the base the greater the space and this stock does also sport a dividend yield of 2.2%. The trigger has not yet been taken out, but one must admire the tight action following the 17% plus combined gain the weeks ending 11/2-9. A break above the bull flag trigger of 69.15 would carry a measured move to the round 80 number. Keep in mind measured moves are not science, and often has investors selling winners too early.