Consumer/Overall Market Risk Appetite Retest:

It’s no secret that the two biggest components of the XLY are AMZN and TSLA and make up more than 40% of the ETF. So if one watches where they go it could lead to valuable information as they will adversely affect the rest of the consumer discretionary space. AMZN on 7/29 recorded a doji candle after a well-received earnings reaction and I thought that would stall its progress. It overshot that a bit but it looks now like its 200-day SMA in conjunction with that may be too much to bear. Of course, time will tell but it would not be out of the realm of possibility to fill in that earnings gap from the 7/28 session near 123 in the near term. TSLA was also rejected soundly at its 200-day SMA, and both of these made solid runs beforehand so it should not be all that surprising. Other top 5 holdings in HD and NKE fell 2.3 and 3.6% Tuesday. Compare that to the top 4 in the XLP, which I was surprised to see comprise of nearly 50% of the fund, in PG KO PEP and COST and all 4 are above their 200 day SMAs and three north of their 50 days. Feels like some reckoning is coming this week.

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