Long In The Tooth:
On a YTD basis the consumer discretionary sector is still in the mix, although it is now the 5th best performing major S&P sector. It still garners respect as it has risen 22% in 2019 thus far, and there are 3 other groups that have advanced in the 21-22% range, including the staples, industrials and communication services (front runners technology and real estate have both jumped more than 29%). The XLY is lower by .8% this week so far, and looking on its WEEKLY chart it has not surrendered back to back losses since the month of May. It has been a bifurcated group, and perhaps can be summed up by the chart of KMX today. It reported earnings today and reversed hard after touching the very round 90 number intraday. It has flatlined since breaking above a double bottom pivot of 86.77 on 9/10. We know the best breakouts tend to work right away, and this one is not “driving”away from the trigger, pun intended. Below is that chart of the XLY, and it to looks suspect as it undercut its 50 day SMA and did not bounce following the gap fill from the 9/4 session. The handle within the cup base is too long in duration as well.
Inflection Point in Overseas Rivals?
The footwear battle between NKE and ADDYY has been a seesaw battle. Of course we will hear from NKE after the bell which will reveal some clarity on the ratio chart between the two giants I have posted below (UAA which should not even be in the discussion is now 30% off most recent 52 week highs). NKE has found some resistance at the very round 90 number in April and July this year, as it carves out a bullish ascending triangle. Obviously PRICE has not confirmed on that breakout yet, so there is nothing to talk about, and ADDYY is lower 5 of the lat 8 weeks, after a very bullish run gaining 20 of 31 weeks ending between 12/28/18-7/26 that rose nearly 60%. Who will stub their toe first?
The homebuilders continue to act well, most likely in part to soft interest rates. Whatever the reason may be, PRICE is all we have to go on. The XHB looks to be forming a bull flag pattern, which would also have to be considered a WEEKLY cup with handle with a pivot of 44.14 in a base that began nearly 2 years ago in January 2018. Below is the chart of a lesser known name of WLH and how it appeared in our 9/18 Consumer Note. The very round 20 number came into play as it was a prior triple top, and now resistance may be becoming support. Risk/reward is now in the favor of the bulls as long as the 19 level holds on a CLOSING basis. The ten year has now fallen precipitously since filling in the gap on 9/13 from the 8/2 session.