The recent negative chatter about the abundance of weak action within the new issue space is warranted. UBER LYFT and PTON have dominated the headlines, but even the formerly good looking PINS is now 28% off most recent highs after breaking below a bear flag. BYND has held up somewhat fine, and below we take a look at a name that is still in bear market mode, LEVI off 22% from its yearly peak, but on a current 6 week winning streak, including a strong gain of 5.3% last week. As poor as the fundamentals are, the technicals are showing signs of improving. A bullish inverse head and shoulders has formed, but I would not get excited about this name until it could CLOSE above the very round 20 number, which would break past an upside gap fill from the 7/16 session. If the jeans don’t fit, the bears must acquit?
Burgers and Donuts Bloated:
The burger wars have been ongoing for years, and have mostly been won by McDonald’s (WEN has acted well until the 13.2% drop the week ending 9/13). Below is the ratio chart comparing MCD to QSR, the parent of Burger King and Tom Hortons. It looks like the scale is favoring back in the direction of MCD after 4 months. MCD is now just 3% off its most recent 52 week highs, while QSR is 10% off its and in the midst of its first 4 week losing streak since last November. The golden arches undercut its 50 day SMA in big volume on 9/10, normally a strong sell signal, but if it could break back above that line with a buy stop above 215, a double bottom base sets up with a pivot of 220.94.
One has to give extra credit to names shrugging off the recent overall weakness. More so when a name reports earnings, and then proceeds to hold those gains in the face of a heavy market. Investors seem to be preferring mature companies as of late and a name that fits both of the statements above could be NKE, and the chart how it appeared in our 9/6 Consumer Note. It is a WEEKLY chart that shows rejections at the very round 90 number, and that figure which was once resistance now could very well be support. Monday was the fourth consecutive CLOSE above 90, and last week demonstrated excellent relative strength RISING 6.5%, while the XLY FELL .6%.