The discretionary sector overall is still enjoying a healthy 2019, up more than 20% thus far, which puts it the fourth best of the major 11 S&P groups. The diverse space is being helped by many names, and one below is SBUX. It was halted near the very round par number on 7/28, and has been trading very taut for well over a year. The ratio chart below over DNKN, shows a strong flavor for SBUX, although truth be told both are behaving very respectfully, with SBUX just 3% off most recent 52 week highs, while DNKN is just 2% off its own most recent yearly peak. The big difference is the YTD gains between the two with SBUX up 50%, nearly double that of DNKN higher by 27%. Let us not forget a new peer jumped into the race, being LK. The stock recently retested a break above a symmetrical triangle successfully last week. The power of caffeine is real.
Seltzer Success Being Notice By Competitors:
Alcohol names are often sought after in anticipation of soft times. Some within the group are already acting well, and the chart below of SAM shows the name sitting right at all time highs. It has broke nicely above the round 400 number on 8/8, a number that posed problems for the one month prior. Its uptrend has been aided by its savvy in the seltzer market. This week a main rival in BUD decided it was going to join the fray, and it did little to disrupt the advance of SAM (imitation is the best form of flattery). That could be a good tell going forward. Boston Beer Co. is not only fending off stocks like BUD, but names like TAP STZ and HEINY which are lower by 25, 14 and 9% from their most recent 52 week highs. There seems to be no hangover on the horizon for SAM, pun intended.
It is often said the 200 day SMA determines the long term trend of a stock. Other sayings regarding the line are “nothing good happens below the 200 day”. Still more many say the slope of the moving average is important too. Below is the chart of SJM and how it appeared in our 8/8 Consumer Note. The stock CLOSED Tuesday at 114 and still trades 11% off most recent 52 week highs. What caught our eye was a “cluster of evidence”, not only finding support at an upward sloping 200 day SMA, but the presence of many bullish, bottoming candlesticks. That gave a good risk/reward scenario, and it is currently flirting with a break above a falling wedge pattern.