ENERGY AND MATERIALS MONEY IS MOVING INTO SOME CONSUMER LEADERS -- RETAILERS ARE DOING BETTER -- WAL-MART MAY BE A BARGAIN

ROTATION OUT OF ENERGY AND MATERIALS ... The biggest market feature of the week was the fact that Energy and Materials were the two weakest sectors. This is a reversal of recent trends. The loss of leadership by those two former leaders contributed to this week's market selling. At such times, money moving out of former leaders usually finds it's way into former laggards. We haven't seen too much of that yet. Utilities (Chart 1) and REITs (Chart 2) continue to hold up very well. That may be the result of low interest rates or, more likely, a pursuit of dividend-paying stocks. That may also explain why value stocks have done better than growth stocks. Two groups that usually attract money in this environment are consumer stocks -- either staples or retailers. Although neither group has created much excitement, there are some stocks in each group that are showing good chart action. Yesterday, I showed McDonalds hitting a new six-month high. Here are a few others.

Chart 1

Chart 2

SUPERVALUE AND WRIGLEY ATTRACT BUYING... In the consumer staples area, these were two of the week's top gainers. Supervalu jumped on big volume on Thursday and shows a big jump in its relative strength performance. It still needs to close over its 200-day average, but it's also in a category that should start to attract new buying. Wrigley is even more impressive. Chart 4 shows the stock in the process of challenging its yearly high. Its relative strength line is jumping as well.

Chart 3

Chart 4

BEST BUY CHALLENGING RESISTANCE... In the consumer cyclical (or retail) category, Best Buy has been a recent leader. Its daily chart shows the stock in the process of challenging its spring high near 56. Its relative strength line shows the stock outperforming the S&P 500 since August. A decisive close over 56 would represent a bullish breakout.

Chart 5

STARBUCKS HITS NEW HIGH ... Starbucks was another retail leader for the week. The coffee stock has broken through its July peak to reach a new record. Neither the coffee nor the stock is cheap however.

Chart 6

RETAIL HOLDERS SHOW GOOD RS... Retailers make up 40% of the consumer cyclical group and have been doing relatively well of late. The next chart shows the Retail Holders trading above their moving average lines. Their relative strength has been rising since early August which means that some money has been flowing into this group. It's two largest holdings, however, show different chart patterns.

Chart 7

HOME DEPOT HITS 52-WEEK HIGH ... Home Depot has been a clear leader in the retail group. Its chart shows the home improvement stock breaking out during September to reach a new 52-week high. That's the second biggest holding the Retail ETF. The biggest is Wal Mart.

Chart 8

WAL MART MAY BE BOTTOMING... Because of its size, Wal-Mart carries a lot of weight in the retail sector. Unfortunately, it hasn't been carrying its weight. That's because it's been one of the worst retail performers. But things may be looking up. The big discounter has been trading sideways since mid-year, but has held its own relative to the S&P 500. Its relative strength line is even showing some signs of turning up. Of course, the stock needs to break through its recent highs and its moving average lines to turn its trend higher. But it might not be a bad place to so some bargain shopping in a group that's starting to get more expensive.

Chart 9