S&P RETAIL SPDR HITS NEW RECORD -- LEADERS INCLUDE BEST BUY, DOLLAR TREE, AND WILLIAMS SONOMA -- MACY'S BREAKS OUT -- HOMEBUILDING ETF HITS EIGHT-MONTH HIGH -- LED BY LENNAR, DR HORTON, AND PULTEGROUP -- CONSUMER DISCRETIONARY SPDR SHOWS NEW LEADERSHIP
S&P RETAIL SPDR HITS NEW HIGH ... Strong buying of retail stocks continues. I've been showing record highs in the Market Vectors Retail ETF (RTH). Chart 1, however, shows the S&P Retail SPDR (XRT) hitting a record high as well. Its relative strength line (above chart) has risen to the highest level in seven months. Falling gasoline prices has a lot to do with retail buying -- especially in lower end retailers. The retail rally, however, has now become much broader based. The biggest retail winners today are Best Buy (+5%), Dollar Tree (4.6%), and Williams Sonoma (9%).
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Chart 1
MACY'S HITS NEW RECORD ... Last Thursday's message shows Macy's (M) jumping to a two-month high on rising volume. Chart 2 shows Macy's breaking through its late August high to reach a new record in today's trading. Its relative strength ratio (top of chart) has also been rising since the start of the month. And it's happening right on time. The Macy's Thanksgiving Day parade in New York takes place one week from today. That's also when Santa makes his first public appearance.
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Chart 2
HOMEBUILDERS ARE ALSO RISING ... It looks like consumer discretionary buying is also spreading to homebuilders. Chart 3 shows the Dow Jones U.S. Home Construction iShares (ITB) jumping today to the highest level in eight months. [It's the second strongest group in the consumer discretionary group behind retailers]. The ITB has just cleared its early July peak. The solid area plots the ITB/S&P 500 relative strength ratio. After falling through most of the year, the RS line has started climbing during November. That's a positive combination of absolute and relative strength.
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Chart 3
LENNAR HITS SEVEN-YEAR HIGH... Lennar is the clear homebuilding leader. Chart 4 shows Lennar (LEN) trading at the highest level in seven years. Chart 5 shows DR Horton (DHI) hitting a new 52-week high. Chart 6 shows PulteGroup (PHM) challenging its spring 2014 high. Three other homebuilders -- Beazer Homes, KB Home, and Ryland -- are rising above their 200-day lines.
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Chart 4
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Chart 5
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Chart 6
RETAIL AND BUILDER BUYING BOOSTS DISCRETIONARY SECTOR... Consumer discretionary stocks are the second strongest group today (behind energy). Within that sector, the two strongest groups are retailers and homebuilders. Chart 7 shows the Consumer Discretionary SPDR (XLY) hitting another record high today. That group has been a market laggard all year, and is just starting to show upside leadership. The XLY/SPX ratio (top of chart) peaked in March and been relatively weak since then. Of nine market sectors, only energy showed weaker 2014 performance. That's starting to change. The XLY/SPX ratio has starting rising during November. The XLY is the strongest sector over the past week. I'm not sure exactly why that's happening. But it seems like a lot of new money is starting to rotate into this under-valued market sector.
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Chart 7
INTEL LEADS SEMICONDUCTORS TO NEW HIGHS... In the technology sector, Intel is having a very strong day. Chart 8 shows Intel (INTC) surging 4% to reach the highest level in fourteen years. That's giving a big boost to the semiconductor group. Chart 9 shows the Market Vectors Semiconductor ETF (SMH) hitting a new high as well. Its relative strength ratio (above chart) is rising as well. [Intel's 19% weight is the biggest in the SMH]. Semis are one of the day's strongest technology groups. And Intel is the biggest percentage gainer in the technology space. Chip buying is good for the technology sector which, in turn, is good for the rest of the market. So is the buying of consumer discretionary groups like retailers and homebuilders
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Chart 8
