Round Ten Roadblock:
In yesterdays Consumer Note we discussed a couple names, APRN and PIR, that underwent recent reverse stock splits and have in our opinion made unwarranted, oversized moves. They met a brick in the wall at the round 10 number, and another undeserving stock to do so this week is MIK. It is weighed down by debt, and is a name that has undergone something we feel could be just as bearish as a reverse stock split, being taken private and coming public again. Party City or BJ’s Wholesale Club come to mind. Below we take a look at the chart of MIK, and it too doubled recently, but still trades 51% off most recent 52 week highs. These names are tricky to trade, but it is again just an illustration of the wildly aggressive moves we have seen from many names in the space. We used the adjective frothy on Wednesday, maybe a better word Thursday would be bubbly in regards to the retail laggards.
50 Day Plunge:
The homebuilding names have been front and center with the constant talk regarding interest rates. The XHB has benefitted as the fund is just 1% off most recent 52 week highs. Other groups that have appreciated due to their reliance on the space are some of the home improvement retailers. RH has advanced 14 of the last 15 weeks, and risen nearly 100 handles in the process. SITE, a landscaping play has gained 22 of the last 32 weeks. Below we take a look at the name of POOL, a former best of breed name. Its chart is sporting some possible leaks, pun intended, as it carves out a bear flag formation. Last week it fell by 5.7%, its largest weekly loss in 10 months in active volume too. A bearish evening star was completed on 9/8, and has seen brisk follow through to the downside, undercutting its 50 day SMA. Keep your life preservers on until it recoups that line.
With the election rhetoric heating up, some names that will seem to benefit would be Twitter, and the New York Times. There is certainly some bifurcation going on between the two stocks, and below is the chart of the latter, NYT, and how it appeared in our 9/3 Consumer Note. It is now near bear market mode down 19% from most recent 52 week highs, and reeling after a recent earnings slide of more than 12% on 8/7, with the next session pushing below the 200 day SMA. It has now CLOSED below that long term secular line for 6 weeks, and the longer it stay there the worse. This is a good example as well of the red flag nature of breakouts unraveling too quickly. Maintain a bearish stance as long as it swims below the 200 day.