Debt Weighs:
Some names should remain private. WeWork will most likely be an example, but only time will tell. BJ is probably another lesson. Both of these names came (about to) to the market debt ridden. In the latter’s case the stock decided to come public, knowing an absolute monster in COST would be breathing down its neck relentlessly. COST has gained ground 24 of the last 34 weeks, rising 100 handles from top to bottom and now trades 4% off most recent all time highs. Contrast that to BJ, which trades 34% off its most recent yearly peak. This is a name that went private and came public again, and I would not be the least bit surprised if it followed in the footsteps of peer PRTY, which is now 70% off its most recent 52 week highs.
Glitter Gone:
The saying in real life, goes “do not judge a book by its cover”. The same can be said about the ratio chart below comparing Tiffanys to Signet Jewelers. Here TIF looks to be vastly outshining, and it is so to speak. However the stock is now 42% off most recent 52 week highs, but SIG is 83% off its most recent yearly peak. TIF looks to be resuming a downtrend after an ugly 16 of 21 week losing streak that nearly chopped it in half between weeks ending 8/3/18-12/21/18. Keep in mind while ratio charts are valuable in demonstrating stocks relative strength against each other, it does not necessarily mean superior absolute strength.
Examples:
The food products group has been a tricky one as of late. TWNK has put up a respectable showing with a YTD gain of 28%, although the Twinkies stock felt a bit bloated this week, pun intended, undercutting its 50 day SMA for the first time this year. On the other side of the spectrum KHC has been awful and now trades 59% off most recent 52 week highs. Below is the chart of LW, and how it appeared in our 8/14 Consumer Note. The name is still 18% off most recent yearly peak, and although we are not huge believers in mean reversion, this one looks poised to play some catch up to the group. It put in a nice performance this week rising 2.6%, and has advanced 7 of the last 8. The inverse head and shoulders has been taken out, now look to add above the 200 day SMA and round 70 figure.