Discretionary Bifurcation:

With more than one-third of the XLY components in just the top 2 names in AMZN and TSLA, we see diverging action. Over the last 3 months, AMZN is lower by 3% while TSLA has gained 14%. When I look through the overall retail group I see a plethora of names trading below their 200 day SMAs which include stocks like LE GPS URBN AEO FL RL and VFC. I could go on and on but I think you get the picture. In the casual dining space names like SHAK and EAT are nearly 40% off their annual peaks, not a typo. Discount plays like BURL and ROST feel heavy. And this is with the XLY just 2% from the most recent all-time highs. Perhaps the glaring discrepancies make it easier to spot the vigor in the group and where your capital should be deployed. Below is the chart of a prime candidate in LULU. I often get questions as to the huge gap up is too extended, in any name, and I will wait for a pullback. Markets confound the most and leaders have a way of not letting you in. In markets as in life you have to pay up for quality. Look at the moves in names like DDOG and UPST AFTER their gaps. Enough said.

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