Big Implications For “Consumer” Behemoth:
The 800lb gorilla in the consumer and technology space has big ramifications. It is the third largest component in the both the Nasdaq and S&P 500, behind AAPL and MSFT. In the XLY it is a commanding top holding at nearly 22%, doubling HD the second largest component. On the WEEKLY chart below we see how the round numbers, and candlesticks, have played an important role in determining short term lows and highs. Higher lows have been made since last December, with the latest low holding on by a thread the week ending 10/4. In my opinion the stock is just fine if it can keep CLOSING above the 1700 figure. Give the XLY credit for being just 3% off most recent all time highs, while the top heavy AMZN is 15% from its most recent yearly peak. The last 3 weeks AMZN has CLOSED very taut, all within just 14 handles from each other, and that type of coiling often can lead to powerful moves. Keep your seat belts on.
Soundlessly the stock of TSLA has been moving higher. Perhaps it is just the bears that have muted themselves, as Tesla seems to be climbing the wall of worry in fine fashion. It rose everyday last week jumping more than 7%, and today fueled higher by another 3.7%. It is touching the 200 day SMA, a line it has been underneath for the most part since mid January. A few consecutive CLOSES above the long term line would obviously be a big positive. Momentum is clearly in the bulls favor having advanced 14 of the last 19 weeks. It broke above a symmetrical triangle Monday, which carries a measured move to 300. It may hit a pothole on the upside gap fill from the 7/24 session, which was its last earnings reaction (it has fallen 3 straight times by 13.6, 4.3 and .6% on 7/25, 4/25 and 1/31 and REPORTS 10/23 after the close).
The casual dining space has been in some slight distribution as of late, most likely causing a bit of indigestion for shareholders, pun intended. CMG is holding up very well, but former best of breed plays like SBUX and WING sit deep in correction mode. Below is a name that is feeling some pain, DENN, and how it appeared in our 9/26 Consumer Note. The stock is lower 4 of the last 6 weeks, and last week recorded its worst loss in 6 months dropping 4.2% (peer WEN advanced .4%). It fell everyday last week, and Monday is following through to the downside falling another 1.2%. Perhaps a collision course for the very round 20 number is in store, which would equate to the rising 200 day SMA presently.