Size Matters:

As AMZN wields its big stick and not shying away from the highs of the bearish evening star pattern that was completed on 2/3, it puts the wheels in motion for the XLY to climb. This has a large effect, being the top holding, on the ratio chart below comparing the XLY to the XLP, a gauge many use to determine “risk-on”. One can see it has not only broken above a bullish falling wedge pattern but more importantly, is showing some follow-through. Now TSLA is playing catch up and that is a potent one-two punch for discretionary. And illuminating the XLY strength theme, the XLP fell 1.5% Monday, its largest daily loss since 1/18, and undercut its 50-day SMA in the process. The XRT, a more broad and “equal weighted” measure of the consumer is still having its issues as it is now 22% off most recent 52-week highs compared to the XLY by 14%. There is a bearish descending triangle set up with a break below 59 carrying a measured move to 51. Strange that the top 2 holdings are CVNA and GME, but the overall group needs more help from the likes of SIG TSCO FIVE NKE BBY, and DKS all off more than 10% from their own annual peaks.

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