CONSUMER DISCRETIONARY SPDR MAY BE NEXT TO CHALLENGE 200-DAY LINE -- EBAY IS ONE OF ITS BEST PERFORMERS -- SO ARE CHIPOTLE, TRACTOR SUPPLY, AND ROLLINS -- AND HOME IMPROVEMENT STOCKS
CONSUMER DISCRETIONARY SPDR NEARS 200-DAY LINE... Yesterday's message showed the Communication Services SPDR (XLC) trying to clear its 200-day moving average which it has done. The next in line may be consumer cyclicals. Chart 1 shows the Consumer Discretionary SPDR (XLY) nearing a test of its red line. Yesterday's message recommended using the Stockcharts Technical Ranking System (SCTRS) to help find stock groups with superior relative performance as well as individual stock leaders within those groups. Those Stockcharts SCTR rankings identified technology, healthcare, and communcations services as the market's three strongest sectors. The XLY is in fourth place with a SCTR ranking of 81. We can also use SCTRs to find XLY leaders.
EBAY ACHIEVES BULLISH BREAKOUT... EBAY (eBay) has the second highest SCTR ranking in the XLY (96) which is just behind Amazon.com at 97. That makes the stock an XLY leader on relative strength grounds. In addition, the weekly bars in Chart 2 show EBAY (eBay) rising above its 2019 peak to register a major bullish breakout. So the stock shows superior relative performance and a bullish chart pattern which is a strong combination.
CHIPOTLE, TRACTOR SUPPLY, AND ROLLINS ARE ALSO XLY LEADERS...SCTR rankings for individual stocks within the XLY identify the next three charts as group leaders.Chart 3 shows Chipotle Mexican Grill (CMG) trading well above its 200-day line and nearing a test of its February high. The stock has the third highest SCTR ranking of 95. Tractor Supply (TSCO) is next in line with a SCTR of 93. Chart 4 shows that stock rising to the highest level since last summer. Rollins (ROL) is in the next spot with a high SCTR ranking of 90. Chart 5 shows that stock rising to the highest level in a year. The idea is to find SCTR leaders with strong chart patterns. All three of those qualify.
HOME DEPOT IS ANOTHER XLY LEADER... Home improvement stocks are also XLY leaders based on a SCTR ranking of 88. A SCTR ranking of 85 identifies Home Depot (HD) as an individual leader in that group. Chart 6 shows the stock trading above its 200-day line and nearing a test of its February high. Lowes (LOW) isn't far behind.
