Earnings Drag:
The XLY is looking at its first FOUR week losing streak in the last 6 months. It is off 1% this week, after the prior 3 fell by a combined, pedestrian 4%. That being said there are some worrisome factors, most notably some poor reactions to earnings recently. Wednesday witnessed some very weak showings by a trio of retail actors. Reliable laggards like URBN and JWN are now down 54 and 49% from their respective peaks. They fell 9.8 and 9.2%, but perhaps a bit more surprisingly was the behavior in LOW which lost 11.8%, and was unable to record the reversal HD did Tuesday after its own release. The latter is separating itself as the clear winner.
Retail Reeling:
The old adage states “nothing good happens below the 200 day”. If that is the case the XRT is speaking volumes with a negative narrative. Currently it trades in bear market mode down 20% from most recent 52 week highs, and is sporting a bear flag formation which are generally continuation patterns in the prevailing direction. The ETF is looking at a possible first 3 week losing streak on 2019, lower by .9% so far, after back to back previous weeks lost well more than 3%. A potential handle on a long WEEKLY cup base of AMZN, by far the funds largest component, is looking dubious.
Examples:
Plenty of stocks have been announcing secondary offerings as of late, and that may be a concern as new shares flood the market in addition to the recent plethora of IPOs. Below is a name that is holding near the secondary offering price, a good sign. The chart of TWNK, and how it appeared in our 5/17 Consumer Discretionary Report, shows a nice uptrend, in particular for a non healthy company as consumers are moving toward more nutritious foods. It also filled in a gap from the 5/8 earnings session. There are a couple things that are leaving a nice taste in the mouth of shareholders, pun intended.