Consumer Picky?

Many declare we are in a “rolling bull” market, and that it is a negative as certain defensive spaces are taking the lead, while growth related areas pause. But technology is still asserting itself with the XLK higher by 28% YTD. The conservative group they speak of is real estate, as the XLRE is the third best performer up nearly 24%, but just above it is the XLY in the third spot. The ETF is higher 4 of the last 5 weeks, and the lone down week ending 6/28 CLOSED at the top of its weekly range. It has made its presence felt over the last one month period being the best major S&P sector performer up nearly 6%. Again bears will mutter that it is mostly the discount names showing the way within retail, but respect PRICE action among the individual names that deserve it. Search and you shall find.

Some Breakups Are Not Hard To Do:

Consumer have changed not only their spending habits, but how much they value their time. The casual dining space caters to both of the aforementioned issues. They get there food quickly, and the wallet does not take a beating. Standouts that have taken advantage of this have benefitted dramatically. Stocks like WING are up almost 50% YTD, and below is two other heavyweights in the arena. Interestingly CMG was a spinoff from MCD back in early 2006, but both have gained handsomely as of late. There may be some reversion to the mean however as the ratio chart suggests. CMG has risen 74% in ’19 thus far compared to MCD higher by 20%. Both names have recently broken above bull flag formations, and expect both to grind higher for the remainder of the year.

Examples:

Bull flags happen to be one of our favorite patterns, and for good reason. A healthy consolidation after a strong move higher shows a reluctance with the bears being able to push the stock down. They work on both the bull and bear side and are continuation formations, meaning they break out in the prevailing direction. Below is a good example with the chart of SBUX and how it appeared in our 7/2 Consumer Report. Notice after a 10 point run in early June, it traded sideways for the last couple weeks. Give credit for a decent showing Monday on a somewhat soft tape too.

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