Amazon Effect:
It always pays to take a look at AMZN anytime you are analyzing the discretionary group. One would have to be living under a rock to not be aware that it represents nearly one quarter of the XLY. It has produced some interesting news recently declaring it is slashing prices at its somewhat recent WFM purchase. The chart seems to look better by the day, as the 1800 number which was rough resistance last October-December, now looks like support. It is now above both a bull pennant and cup with handle breakout, and acting well POST breakout, and we know the best ones tend to work out right away.
Finding A Home In the Depot Stock:
Our focus is going to be on the building group, or should I say the fringe names that benefit from the strength in the overall space. HD could be considered the 800 lb gorilla in the room. This name is showing great firmness higher 13 of the last 15 weeks. Below is the ratio chart of the stock compared to the S&P 500, and it shows just how well it is acting against the widely followed benchmark. It is quickly approaching a cup base pivot of 215.53. Chief rival LOW is even closer to its own cup base trigger of 117.80.
Examples:
The housing related group has seen a nice move with interest rates on the descent. The ITB rose more than 5% last week, its second best weekly gain in 27 months. Strength is filtering to some of the periphery names with WSM rising more than 7% last week, and perennial laggard BBBY up 32% over the last 2 weeks (of course there has been some other news with the latter name). Below is the chart of FND and how it appeared in our 3/12 Consumer Report. The round number theory came into play and is now higher 13 of the last 15 weeks as it builds the right side of a cup base.