Equal Weight Showing Strength:
For all the banter we hear that the majority of stocks are starting to be left behind in making new 52-week highs, or stocks above their 50 and 200-day SMAs are starting to wilt, within the discretionary space, the equal weight RCD is still outpacing the XLY. Of course, that will be affected by the top-heavy water-logged XLY with AMZN and TSLA, but give credit where it is due. Inside the RCD, both Amazon and Tesla make up just 4% of the fund, compared to the XLY where they comprise 40%. The “top holdings” in the RCD are essentially all from the homebuilders and casual diners. The RCD is illiquid, but just looking at its PRICE action, it is just 14% from its most recent 52-week highs while the XLY is nearly double that. Last week there was some bifurcation among the two with the XLY higher by 2.3%, while the RCD fell by 1.7%. Give AMZN its due as it rose 9% last week recording a bullish WEEKLY engulfing candle, although it remains to be seen if it will be able to conquer the very round par number here. Its bearish island reversal completed on 2/3 still looms large.