Amazon Vulnerable?

The supertanker in the retail arena (many still consider it a technology play), did not participate in the decent session Thursday. This should not come as to much of a surprise, since as recently as last week it was 300 handles off its most recent 52 week highs. AMZN still makes up more than 22% of the XLY, more than double that of the second largest component in HD, and I have declared before as long as it holds the 1700 number, it should be fine. But that scenario is looking a bit softer as it has been rejected at its 200 day SMA for the second time in as many months. Monday morning quarterbacking will point to the double top near the very round 2000 number between August-October ’18 and this July. The ratio chart below shows the smaller more nimble names in the XRT are able to skirt the AMZN worries much better than in recent years. The trend in the XRT’s favor began this summer, but it is holding true this week too as the ETF is higher by 2.4%, while the XLY is DOWN .3%. More work is needed to declare the XRT the winner, as it is lower by 9% over the last one year period, as the XLY is UP by the same amount, but momentum is in the XRT camp.

Retail Disparity:

In every group of course there will be leaders and laggards. Some are more glaring than others. The consumer space does seem to be dominated by fewer and fewer generals, with mega caps like WMT COST and HD among them, but if one was lucky enough to pair them up with some of the weaklings below, careers have been made. The misfortunes of some former best of breed names, and good examples of why not to add to losers, are GOOS and ETSY. One can see the very different directions they have traveled this year. Trends are more likely to persist than they are to reverse, and as the XLY is off fractionally this week so far, both of those aforementioned names are down more than 8%. They are also both more than 40%, not a typo, from their most recent 52 week highs. ETSY is lower everyday this week, and has declined 8 of the last 9 sessions. GOOS was rejected firmly at its 200 day SMA on Monday, and the last 3 days has slumped 14%. Why have they encountered such distress? Who knows, but PRICE is telling you exactly what you need to do, avoid them.

Recent Examples:

Leisure plays have been somewhat soft with EXPE and MTCH having “experienced” strong drawdowns this week. There has been some discussion how MSFT in Japan is seeing productivity gains from a 4 day work week, so perhaps if this is adopted in the coming years in other countries, the space could flourish. Another name in the arena that has had a tough go of it recently, is CHDN and the chart below is how it appeared in our 10/22 Consumer Note. The stock lost 3.3% last week, and this week is tacking on more losses falling another 4.3% with one session left in the week. It is a good lesson of how the best breakouts tend to work right away. Notice the weakness for CHDN after not being able to CLOSE above a bull flag, reversing intraday on 10/21. Today ended a 5 session losing streak, with all 5 finishing in or at the lows for the daily range. The track seems to be a little slippery for the time being on this one, pun intended.