Amazon Weighing:
Discretionary, one of just three major S&P sectors to rise Monday, acted “well” on a semi soft tape today, with the XLY and defensive spaces of staples and real estate up fractionally. But if one was to look under the hood, the underlying strength came from the more diversified XRT. The elephant in the room in AMZN has been weighing down the XLY, as it has slipped 6 of the last 7 days. There has been a shift in favor of the XRT as seen on the ratio chart below against the XLY in recent months. In fact on a 3 month look back period the XLY is actually LOWER by 1.1%, while the XRT has GAINED 6%, nice divergence for the latter. It formed a nice double bottom at the 37-38 level last December and this August. As long as AMZN’s chart looks melancholy, favor the smaller, more nimble David’s over the Goliaths.