RETAILERS HELP LEAD CONSUMER DISCRETIONARY SPDR HIGHER -- XLY IS NEARING TEST OF OVERHEAD RESISTANCE LINE IN BULLISH SYMMETRICAL TRIANGLE -- CLOTHING AND APPAREL RETAILERS ARE HELPING LEAD IT HIGHER
CONSUMER DISCRETIONARY SPDR SHOWS NEW LEADERSHIP... Chart 1 shows the Consumer Discretionary SPDR (XLY) rising today to the highest level in six weeks. That's setting up a possible test of its declining trendline drawn over its July/September peaks. The overall shape of its pattern since July looks like a "symmetrical triangle" which has been contained between two converging trendllines. And that bullish pattern is usually resolved on the upside. Although its absolute performance since July has been sideways, its relative performance has been weak. That can be seen by the falling XLY/SPX ratio in the upper box. That's because the XLY has been trending sideways since July, while the major stocks indexes have been hitting new records. An upside breakout by the XLY would be a positive sign for that sector. And would help broaden the overall market's uptrend heading into the Christmas shopping season. That's especially true of retail stocks which are heavily dependent on yearend holiday buying.
CLOTHING AND APPAREL RETAILERS ARE LOOKING BETTER...Two of the retail groups helping to lead today's XLY rally are shown below. Chart 2 shows the Dow Jones Clothing & Accessories Index rising to the highest level since July. That's after rising above a falling trendline over the last month. That's an encouraging sign for that group.
Chart 3 shows the Dow Jones Apparel Retailers Index rising to the highest level in more than a year. Its relative strength ratio (upper box) bottomed during August and has been rising since then. That's another encouraging sign for that important retail group.
RETAIL LEADERS...Three of the strongest stocks in those two retail groups are shown below. Chart 4 shows Ross Stores (ROST) rising to a new record this week. That apparel retailer achieved a bullish breakout during the summer and has been hitting new records since. Chart 5 shows TJX (another apparel retailer) nearing a new record after achieving a bullish breakout this autumn.
Chart 6 shows Lululemon (LULU) also nearing a new record which makes it a leader in the clothing & accessories group.
A LOT TO BE THANKFUL FOR THIS YEAR... Stocks are entering the Thanksgiving weekend in solid uptrends. The Nasdaq and S&P 500 are hitting new records again today, with the Dow not far behind. Small and midsize stock indexes achieved upside breakouts this week. Chart 7 shows the S&P 600 Small Cap Index rising to the highest level in 13 months (matching a similar breakout in the Russell 2000). Chart 8 shows the S&P 400 Mid Cap Index doing the same. That has helped broaden out the breadth of the market rally. Nine sectors are in the green today with four of them hitting new records. Those four include Communication Services, Technology, Healthcare, and Financials. There's a lot to be thankful for this year. So Happy Thanksgiving to one and all.
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