Not All Retail Created Equal:
There are some startling differences in some of the most well known consumer ETFs. One happens to be trading just off all time highs, while the other the XRT is languishing well underneath both its downward sloping 50 and 200 day SMAs. Perhaps this is a lesson in concentration versus diversification, as the top 4 holdings in the XLY in AMZN, HD, MCD and NKE represent nearly one half of the fund. The XRT by contrast has no member being more than 1.75% of the ETF. The old adage goes “concentration creates wealth, and diversification preserves it”. Of course one has to be astute in their stock selection, but the makeup in the ETFs previously mentioned are a good illustration of the old axiom.
Vanity Group Leaders In Short Supply:
The popularity of the selfie stick is so far in the rear view mirror it can barely be seen. It was a good indication however of the lengths many would go to make themselves look good. There certainly is a market for stocks in the space, albeit two names stand out head and shoulders above the rest, ULTA and EL. Below is the ratio chart of ULTA:SBH and shows just how strongly ULTA has outperformed its peer. SBH is not alone in its weakling status as ELF is also 37% off its most recent 52 week highs (AVP and COTY are well off their highs too, even with firm recent runs). Longs in the laggards have most likely had mascara running down their eyes.
Examples:
On strong sessions like Wednesday, many names will go higher as a rising tide will lift all boats. For those left behind, and not able to participate on a robust tape, one would be smart to tread with caution. A possible example of just this could be the chart below of SEAS and how it appeared in our 6/5 Consumer Report. The name lost 2% Tuesday, and is lower 7 of the last 11 days. A potential red flag was its inability to CLOSE above a 32.57 cup base pivot recently in a base that began the week ending 9/14/18. It is nearing a gap fill from the 5/24 session where the trade would be best closed out.