Markets roared to start the week Monday, with the lagging financials the big winner up well more than 2%. The groups bulls want to see underperform were right on cue too with the staples, utilities and real estate all LOWER on the day. The discretionary group displayed some odd behavior today with the lagging auto space showing strength, and the homebuilders one of the worst acting subsectors within the consumer arena. LEN PHM and TOL brother all CLOSED near the UNCH mark today. TOL and LEN still remain in bear market mode off more than 20% from most recent 52 week highs, not the best of action. Below is the chart of the ITB and it is currently testing a short double bottom breakout trigger of 35.46 taken out on 3/27. All of the aforementioned names are taking shelter right above their 200 day SMAs, pun intended.
Under the Hood of Retail:
We are all aware by now the changes in the major S&P sector ETFs. The XLY is the more followed fund, but remember it is dominated by AMZN, and that is a bit of an understatement as it makes up nearly one quarter of the ETF. Below is the ratio chart contrasting the XRT to the S&P 500. It is a more clear picture larger umbrella of names in the group. For example to largest component in the XRT, KMX represents just 1.4% of the ETF. It is heavily weighted to apparel, or clothing names, and the chart below suggests they are not pulling their weight against the S&P 500. Lower lows and highs are in place for the last 5 months.
I may sound like a broken record stating the the best breakouts tend to work out right away, but the quicker one can be convinced of this the better. Below is an excellent example of GRMN and how it was profiled in our 3/28 Consumer Report. The stock is now higher 13 of the last 14 weeks after a push off the round 60 number in late December last year. A 16% move the week ending 2/22, in the strongest weekly trade in 2 years, was digested well for 4 weeks before last weeks break above a bull flag. The measured move is to the very round par number, which could be hit later this year.