Douglas Busch

Discretionary Charge: Over the last one month period consumer discretionary is the second-best major S&P sector. It is a good sign and even better is the reemergence of technology as the strongest behaved of the 11 tracked groups during that timeframe (Monday however, did rear the ugly head of the defensive spaces leading with real estate and staples as 2 of top 3 sectors). But the chart below of the XRT is carving out a potential bullish ascending triangle, and we spoke to strength with this ETF, in our 3/26 Consumer Sector Review. GME is still by far the largest holding, and Monday is testing its rising 50 day SMA, and a bullish engulfing candle from 3/25. Other top holdings that look attractive are SIG, RCII, and KSS. AMZN is the big wild card in the consumer space as it dominates the XLY, making up 22% of the ETF. TSLA, which many are still unaware of its large presence in the fund at 15%, packs a powerful one-two bunch to the entire group. On AMZN this week will be interesting if it can CLOSE above the round 3400 number. Has been pesky resistance for the behemoth dating back to last summer. 

Taking The Elevator Up: Although the industrials have never been the best major S&P sector on a YTD basis in at least 30 years, there are still plenty of very firm leaders within. In 2021 the airlines have been the best sub-sector, but I do not think of them as traditional industrial generals. But other names that are acting robustly in the space are LPX. It is extended, but one must admire its current 10-week winning streak, and all but one of them CLOSED in the lower half of the WEEKLY range. CSX is approaching the very round par number and the last 3 weeks all CLOSED very tautly, within just 1.03 of each other. SAIA has advanced nearly 200%. Below is the chart of OTIS, which began trading on its own nearly one year ago. Friday marked its first CLOSE above the round 70 number, and a move above 71 would be a break above a bull flag formation, which carries a measured move to 79.  

Nasdaq Momentum Making Its Presence Felt: The Nasdaq now sits just 3% off most recent all-time highs, and this week is showing solid firmness, up 2.6%, after the prior week rose by 2.6%. Last week CLOSED right at highs for the WEEKLY range, and this week is doing the same with one session left. Software is trying to join the nascent technology party, with the IGV advancing by 3.4% this week thus far after the prior week did roughly the same. Over the last one-week period the IGV has more than doubled the SMH's gain, and that's a welcome sign for the bulls. Of course, the "old tech" and mega-cap names continue to help power the Nasdaq higher too. DELL MSFT and GOOGL are just a few examples of that. The measured move with the break above the ascending triangle is 14800. But some of the aforementioned large-cap names did record some spinning top candles, which often indicate a stock may be in for a pause, which would be totally acceptable after the strong moves recorded.

Sexy Staples? One concern many have, which is valid, is the emergence of some of the defensive groups recently. Over the last one-month period, some of the best performing major S&P sectors are conservative in nature. Real estate is the strongest, and 2 of the other top 5 are utilities and consumer staples. The staples are running neck and neck with technology, with the XLP and XLK both higher by more than 7% (to be fair on a YTD basis consumer staples are the last of 11, albeit still higher by almost 3%). Last week the XLP fell by .9%, ending a 4-week winning streak that added a respectable 8%, all CLOSING at highs for the WEEKLY range and in above-average volume, for a space that traditionally is hard to get moving. Some of the more traditional areas of the staples are sporting winners with SAM and MO acting well. SAM found good CLOSING support near the very round 1000 number in its current cup base, and MO is looking like its bull flagging just above to 50 figure. If nothing more if technology can find its footing, perhaps staples will round out a nice barbell approach for investors. 

Looking Under The Healthcare Hood: The diverse healthcare space will see sub-sectors rise and fall. If one can latch on early to emerging trends they can potentially profit handsomely. As much as we are watching the biotech arena for a possible bump higher, at the moment medical equipment names are beginning to act firmly. On the PRICE chart of the IHI below, we see the right side of a cup base trying to take shape. The ETF is just 5% from most recent 52 week highs, while the XBI is now 23% off its own yearly peak. STAA is doing the same thing on its chart as it builds the right side of a possible cup base, although it is V-shaped, and those are somewhat failure-prone. TXG is sniffing out a cup base pivot of its own just above the very round 200 number. BRKR is honing in on its own cup base trigger that aligns with the round 70 figure. Watch SWAV for its double bottom base at the 140 number. Biotech, via the XBI, is showing some fragility Tuesday after a decent bounce off its 200 day SMA. Individual leaders in the group are scarce. Nothing wrong with waiting for some broad leadership to participate.