Crude Awakening? Anyone who was driven down the East coast of the US from NY to FL has undoubtedly seen a plethora of CBRL locations. I am old enough to remember that this casual diner used to be thought of as a barometer of PRICES at the pump, as they reside mostly where consumers stop to eat and fill up the tank. Could its formidable PRICE action be a canary in the coal mine that energy costs may continue to fall? The stock is still 18% off most recent 52-week highs, but first, give it credit for not retesting the June-July lows in a show of strength. Last week completed a bullish three-week tight pattern with the last 3 all CLOSING tautly, all within just 1.11 of each other. It trades in an illiquid fashion and REPORTS earnings this Friday before the open (was lower for SEVEN straight reactions and 9 of the last 10) so use this as an illustration of what may occur in energy. A drop in crude can keep this nascent discretionary sector jump going.
Small Buisness Optimism? To be certain I am far from an economist and have zero interest in becoming one. But it is widely known that small business is very important as they generate nearly all net job gains. When this segment of the economy is healthy it could be a good sign overall. Some companies have their pulse on this theme better than other and below is the chart of CTAS which I have closely followed in this regard. They are primarily a uniform play, however, do a multitude of services for small businesses. Again I am strictly a technician and therefore believe the PRICE action of a chart can tell you a lot about the industry it is in and also where it can be going. CTAS is essentially UNCH YTD but trading right off all-time highs and last week (up 1.2% as the XLI dropped .1%) bullishly digested the big 11/11 week-ending gain of 8.1%. At the expense of sounding like a broken record, we favor names that never went on to touch their June-July lows. This name could be ready to set up an add-on on the way UP with a bull flag, something the leaders very often do.
Size Matters: As everyone looks to the direction of the greenback, interest rates, and crypto for signs of what the market may do next, could it be as simple as what the small caps do? Keep in mind this space tends to lead and remember how one of the most telegraphed breakouts in some time almost 1 year ago fell apart in rapid fashion. On the chart below one could see the very clean breakout above a flat base with the IWM jumping 6% the week ending 11/5/20. The saying goes "if it's obvious it's obviously WRONG" comes into play here. The ETF subsequently went on a 4-week losing streak falling by a combined 12%. It "led" in this situation too as the S&P 500 and Nasdaq did not start their descents until 3 weeks later (Dow fell roughly in line the same as the IWM). The point I am trying to make here is the IWM has been demonstrating some relative strength as the only of the 4 aforementioned benchmarks NOT to undercut their June lows. If they can break this string of lower highs that began at 220 to start 2022, could that be a sign that a real bottom is in, as they potentially "lead" to the upside here? A decisive CLOSING break above 190 next week could be the catalyst.
Home Is Where The Heart Is: They say one's best investment they can make is their home. During COVID many upgraded their properties and a good indication of that was seen in the clever symbol POOL which ran from 160 in March 2020 to almost 600 last November. It has since retreated firmly and the chart of RH rose in a more robust fashion from 73 to over 730 between March 20'-April '21 (it was set back at the 300 number this month). Others that reported earnings recently in the arena include WSM and home improvement retailers like HD and LOW. Below is the chart of the ITB, a pure play homebuilder ETF, and it could be coming in to fill in a gap that completed a bullish island reversal from the 11/9 session in the near term. Obviously, they are interest rate sensitive and the group exploded higher on 11/10 up 11% after a "tame" CPI reading. The ETF is still 30% off most recent 52-week highs and if this fund can get back above its 200-day SMA promptly it would be a good sign for the overall group.
Earnings Deluge: This week has brought on an abundance of consumer names reporting numbers. Most thus far have acted well POST the release with some that were to me surprising. DNUT is inching above a bull flag pivot of 14.50 which carries a measured move to 18. TJX took out its own bull flag trigger of 72 which implies a move toward 82 into year-end most of which has not been accomplished. Remember though the measured moves are just guidelines and in fact on its WEEKLY chart is breaking above a cup base pivot of 77.45. M is trying to distance itself from the very round 20 number and its 200-day SMA as well in the process. BBWI which went from 5-80 between March '20-November '21 will attempt to break above the top end of the range between 30-40 from this summer. BKE, which REPORTS Friday morning, has traded between those same numbers and is sporting its own flag just above 40. Below is the chart of WMT which excelled this week and is higher by 4% heading into Friday.