FALLING OIL BOOSTS CONSUMER DISCRETIONARY STOCKS -- LEADERS INCLUDE DISNEY, WHIRLPOOL, AND KOHLS -- AUTOS AND HOMEBUILDES ALSO CLIMB -- GENERAL ELECTRIC AND FORD HAVE GOOD DAY -- RYLAND AND TOLL BROTHERS TURN UP
CONSUMER DISCRETIONARY SPDR SHOWS RELATIVE STRENGTH... Consumer discretionary stocks have been among the biggest beneficiaries of falling oil prices. Today is no exception. With crude falling 8% during the day, consumer discretionary stocks are among the day's biggest gainers. The daily bars in Chart 1 show the Consumer Discretionary SPDR (XLY) surging more than 1% and nearing a test of its yearend high. Its relative strength ratio (top of chart) has broken out to the highest level in a year. XLY leaders include jumps of 8% and 7% in Disney (DIS) and Whirlpool (WHR) to record highs. Home improvement stocks also did well with Home Depot (HD) and Lowes (LOW) hitting record highs. In the apparel retail groups, Kohls (KSS) jumped more than 6% to a new eight-year high. Autos and homebuilders also did especially well.
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Chart 1
GENERAL MOTORS LEAPS 5% AS FORD GAINS... Falling gasoline prices may also be increasing demand for autos. Chart 2 shows General Motors (GM) surging more than 5% today in very heavy trading. It's nearing a test of its January high. Its relative strength ratio (top of chart) is rallying as well. Chart 3 shows Ford (F) having a more modest gain of 1.3%. Ford, however, is trading back above its 200-day average and is testing its December high. Its RS line is also rising.
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Chart 2
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Chart 3
HOMEBUILDER ETF IS ALSO BOUNCING... Within the cyclical sector, homebuilders are also having a strong day. Chart 4 shows the Dow Jones Home Construction iShares (ITB) jumping 1.7% in rising volume. The ITB is back above its 50-day line after bouncing off its 200-day line in mid-January. Its relative strength ratio (top of chart) is rising again). Several individual homebuilders showed gains in excess of 2%. A couple even achieved upside breakouts.
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Chart 4
RYLAND AND TOLL BROTHERS HIT NEW RECOVERY HIGHS... The daily bars in Chart 5 show Ryland Groups (RYL) closing at the highest level in eleven months. Recent upside volume has also been impressive. Its relative strength ratio (top of chart) has also turned up. Chart 6 shows Toll Brothers (TOL) closing at a new seven month high. Its relative strength ratio (top of chart) has also turned up. Falling interest rates may be helping drive money back into homebuilders.
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Chart 5
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Chart 6
S&P 500 STILL IN TRADING RANGE ... Crude oil dropped more than $4.00 today to make energy the day's weakest sector (-1.65%). That weighed on the S&P 500 which sold off late in the day. The daily bars in Chart 7 show the SPX still stuck in a sideways trading range. It bounced impressively off its 200-day average on Monday. Today, however, it fell short of its mid-January high. It also ended slighted below its 50-day line. The hourly bars in Chart 8 shows the price action since December in more detail. Chart support along its December low held early in the week. To break out of the sideways pattern on the upside the SPX needs to clear its mid-January intra-day peak at 2064. The downturn in the last hour of trading kept the SPX below its December/January down trendline.
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Chart 7
