Gauging Risk Appetite Within Consumer Space:

A very common way to feel out how lively the consumer, and the sector itself, is through the ratio chart comparing the XLY to the XLP. They have similar YTD and one-year lookback period returns, but over the last one month, there has been some slight divergence with the XLP up 3% and the XLY lower by 3%. The XLY’s top 2 holdings in AMZN and TSLA make up 40% of the ETF, and each has been waffling but looks ok, with TSLA trading between the round 1000-1200 figures. Digging down deeper into the discretionary space there has been some technical damage with recognizable names like CMG and SBUX near bear market mode in the casual diner group. Footwear has been beaten up with DECK and CROX 25 and 31% off their annual peaks and NKE is now below its 200 day SMA. MELI, like TSLA, bounced strongly off the very round 1000 number. RH is now 35% off its highs made last March and LULU is 29% from highs achieved on 11/16. For me discretionary, with the exception of some select groups, still needs to prove itself. Staples were among the worst behaved major S&P sectors Tuesday and last week did record a spinning top candle on the largest WEEKLY volume in more than 20 months. Is it time for discretionary to make a move against their defensive peers? PRICE will dictate that.

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