The discretionary space continues to find reversals near the very round par figure via the XLY. The 10/29 and 11/20 sessions, and today all came within one handle or less before seeing buyers step up. Now the ETF is far from out of the woods and still trades 12% off most recent 52 week highs. It is beholden heavily to AMZN HD and MCD, which account for nearly FORTY percent of the fund. MCD has more than held its own, but AMZN and HD still trade right at the bear market threshold of 20% down from highs. In my opinion one should focus more on the XRT, as it is much more diversified and Monday it recorded an excellent reversal like everything else registering a bullish hammer candle, which doubled as a harami. A top ten holding in the XRT, SBH has been acting well as it is one of a very select few that have been above BOTH their 50 and 200 day SMAs since September. Today it found support at its 50 day SMA showing a doji candle, and this could be a very smart entry with a tight stop. Below is the chart and how it appeared in our Consumer Report from 11/20. A move back ABOVE the very round 20 number would potentially bode a firm response in price action.
The recent market maelstrom has put into question a lot of myths. One we focus on here is that luxury retail names could be immune somewhat in a downturn as the wealthy are less effected. The chart below shows that may not be as prevalent as it once was. Stocks like KORS are down 13 of the last 15 weeks, and now 48% off most recent 52 week highs, WITHOUT undergoing a 2:1 split (poor attempt at humor). TPR is 35% off its own highs, and we were skeptical of the name change from COH just over a year ago. TIF perhaps the best of the aforementioned bunch is 40% off its own highs. It is down 9 of the last 10 weeks and has not recorded a week of accumulation since the last week of May. Now discount plays, are often seen as defensive in slides, are also slumping in sympathy with the extravagant plays. OLLI on the chart below is finally playing catch up as it cratered 22% last week, its FIRST double digit loss EVER. Most likely it is just a function of a lower tide taking all boats with it, but some of the moves have been breathtaking.
The casual dining space has been a tricky one, like most everything else. Some names like CBRL, DENN and YUM have been very strong, and at the other end of the spectrum is a DFRG is now 64% off most recent 52 week highs. NDLS, which looked promising all year, until the week ending 10/26 saw a nearly one quarter haircut. True to perceived form, leaders in the space rose smartly today best evidenced by WING and EAT. Below is a name that should be put in the best of breed conversation LOCO, and how it was presented in our Consumer Report from 12/4. On both a daily and weekly chart, the action looks positive as it trades just above a daily cup base trigger of 14.50 taken out on 11/2. Peeking at the weekly chart, more important on the longer time frame, it is trading near a 14.95 cup base trigger in a 17 month pattern that began the week 6/16/17 and taken out the week ending 11/2. Respect the fact that just below is a level of comfort at a RISING 50 day SMA, and one must also admire that it never really undercut that line for long during a very difficult 2018.