Stock Trends
Consumer discretionary focus
Good morning,
Today, we’re focusing on the consumer discretionary sector.
As shown in both reports earlier this week, we’ve seen some notable improvement in our risk ratios, especially from consumer discretionary relative to consumer staples.
However, a disproportionate share of that spread has come from the poor performance of staples, not from a huge improvement in discretionary.
I’ll keep comments brief, but want to highlight what is and isn’t working in this group, as well as what recent bounces look to be for real, and which ones investors should consider fading.
Toward the end, we’ll also look at:
Small-cap long ideas
Hot List updates
and more!
Apparel
Never a bullish message on the economy when Ross Stores and TJX are the two stocks in the sector closest to their 52-week highs
ROST is the better chart here, but TJX is at 11-month relative highs vs. SPX.
The fun throwback run for Ralph Lauren is ending
Nike currently retesting last April’s lows
So much for an inverse H&S playing out. 19-year relative lows! Whoah.
LULU trying to base but an untouchable trend
I have only one fundamental rule that I truly believe in, and that is that any apparel company that trades at 90x earnings is a short and will inevitably go down more than 50%.
See also: Under Armour 10 years ago
And ON Holdings (the maker of On Cloud shoes) right now
50% drawdown incoming once this support line breaks.
