CONSUMER DISCRETIONARY SPDR HITS NEW RECORD -- S&P 500 RETAIL SPDR ACHIEVES BULLISH BREAKOUT-- MATERIAL SPDR NEARS UPSIDE BREAKOUT -- COPPER AND STEEL STOCKS LEAD XLB HIGHER
RETAILERS LEAD CYCLICALS TO NEW HIGHS... My message from last Monday wrote about apparel retailers leading retail stocks higher which were leading the cyclical sector higher. The same headline could be written again today. Chart 1 shows the Consumer Discretionary SPDR (XLY) rising above its August high to a new record. It's the day's strongest sector. The XLY/SPX ratio (top of chart) has turned up as well. It's also a good sign when retailers are leading it higher. Chart 2 shows the S&P Retail SPDR (XRT) breaking out to the highest level in fifteen months. Its relative strength ratio (top of chart) is turning up as well. Apparel retailers were the day's strongest group. Also leading were home improvement stocks, clothing & acessories, specialty retailers, and autos. That's a good sign for the economy and the stock market. So is the fact that market leadership has switched from defensive staples to economically-sensitive cyclicals. That's seen by the dramatic upturn in the Cyclicals/Staples ratio in Chart 3.
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Chart 1
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Chart 2
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Chart 3
COPPER AND STEEL STOCKS LEAD MATERIALS HIGHER... Chart 4 shows the Materials Sector SPDR (XLB) on the verge of a new high. Its relative strength ratio (top of chart) has been rising for the past month. The two top groups today are steel and copper. Chart 5 shows the VanEck Vectors Steel ETF (SLX) trading at a two-year high. Individual steel stocks hitting new 52-week highs include Cliff Natural Resources (CLF), US Steel (X), and AKSteel (AKS). Chart 6 shows the Global X Copper Miners ETF (COPX) near a sixteen month high. Copper leaders include HudBay Minerals (HBM) and Freeport McMoran (FCX). The S&P 500 Metals and Mining SPDR (XME) is at a two-year high (not shown). Foreign miners like BHP Billiton (BHP), Rio Tinto (RIO), and VALE are also rising sharply. That's a sign of global economic strength. All the major U.S. stock indexes hit new records again today. The fact that cyclicals and retailers led it higher is a good sign for the U.S. economy.
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Chart 4
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Chart 5
