Discretionary Pursues Technology:
We are all aware of the exodus away from technology into more cyclical groups in recent weeks, as this week was the Nasdaq’s FIRST 3 week losing streak in 13 months, and each of them CLOSED in the lower half of the WEEKLY range, with the tech rich benchmark back in correction mode 11% off most recent 52 week highs. Interesting on the chart below is the narrowing of the lead technology once had. Earlier this summer its lead over the second best discretionary group was a double. It will be interesting to see how this plays out into year end. One has to remember if AMZN falters, the largest holding in the XLY by far at 23%, discretionary may have a harder time seeking to overtake tech on a YTD basis. Perhaps one should focus on the more “equal weighted” XRT, which is resting upon its rising 50 day SMA not very far from the very round 50 number as well. It rose 1.3% this week, while the XLY FELL 1.5%. One to focus on in my opinion in the next couple weeks is if ETSY can hold the very round par number. If it can break above 118 it would negate a bearish head and shoulders pattern.