Consumer Ready For Post Holiday Hangover?

The XLY, like many ETFs, is flawed somewhat with very heavy weightings near the top. This fund is no exception as AMZN represents nearly one quarter of it (more than 40% when you add the second and third largest holdings HD and MCD). We are just here to monitor PRICE action, so let’s get right to it. The fund was on a major breakout watch, with a three week tight pattern at all time highs, the weeks ending 9/14-28/18 as all three CLOSED within just .20 of each other. That type of coiling action could lead to explosive moves but when it did not materialize, the chart folded like a cheap suit. Volume on this nearly 4 week comeback has been lukewarm, compared to the selloff on Q4 last year, but more concerning to me is the slope of the WEEKLY 50 day SMA is sloping lower for the first time in years.

Retail Happenings:

Although we are heading into earnings chaos this time of year, not to many retailers have been reporting just yet. That does not mean the group is not making headlines. JWN warned on holidays sales today and the stock dropped almost 5%. Perennial laggard BBBY, which traded at 80 in late ’13, actually jumped on an earnings release. Last week rose more than 27%, its best gain in many years. For those that believe overall moves are getting a bit long in the tooth when the garbage names in the space start to bubble higher, they can point to APRN. A name that probably should never come public, it raged higher Tuesday by more than 45% in the best daily volume since coming public. It broke above its 50 day SMA for the first time since last July, but we know there are much better fish to fry.

Examples:

The casual dining space has witnessed some nice moves recently, most notably CMG breaking above a 501.08 double bottom trigger on 1/10, and then even more bullish retesting the pivot a couple sessions later and holding firm. Below is a chart of CBRL and how it was presented in our Consumer Report from 1/2. It was a play on a weak crude price as the vast majority of their establishments were located along interstates. A good tell may be the fact that the stock kept traveling northward even as oil appreciated. It is now more than 10 handles above the suggested entry and is looking to break free from the grips of its 50 day SMA. If it can do so the corresponding move could be tasty, pun intended.

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