XRT Bull Trap?
The comparison of the more diverse XRT to the denser XLY have been mentioned frequently. The gap is somewhat narrowing as the XRT begins to show a better complexion on its chart. The ETF is still in correction mode down 13% from most recent 52 week highs, but less than 2 months ago it sat in bear market territory. It is at a line in the sand here in my opinion, as not only is it not accelerating from a recent break above double bottom pattern, but it does not want to CLOSE back below its 200 day SMA so quickly after it just did so with 4 brief sessions above it in early September. Prior to this the XRT found firm pushback at the 200 day SMA since last November, so this recent break above the secular line could be an important shift if it can become support leaving behind the feeling of stiff resistance.
Revenge Of The Little Guy:
Not too long ago talk was incessant about how Amazon was going to destroy smaller names in the retail arena. Sure there have been disruptions to many other brick and mortar names, but let’s give credit to some of the plays that have done their part to succeed against this. Full disclosure I did write recently about in a bullish light about AMZN as long as it remains above the round 1700 which happens to be a double bottom from this May and October. If it falls underneath there all bets are off, and keep in mind it has gone literally NOWHERE over the last one year period, UNCH in that timeframe. Below we see how since the beginning of 2019 it has been vastly outshined by the likes of HIBB TPX WSM AAN KMX and BOOT to name a few. A David versus Goliath modern day story.
The retail space has been a bifurcated one, but some smaller names are showing that they deserve to be mentioned in any chatter about how their larger cap peers are outperforming. Below is the chart of an example in ZUMZ and how it appeared in our 10/1 Consumer Note. This is a good illustration of round number theory, and how one can ADD to leading stocks on the way UP. This one acted well POST breakout from a double bottom in early September, and we know the best breakouts tend to work out right away. It defended the round 30 number very well with 5 sessions in the last few weeks trading below the figure, but zero CLOSES under it. Now it is trading right at a possible add on buy point through a 33.57 trigger. As always demand a CLOSE above.