The recent bearish action on the S&P 500 (NYSEARCA: SPY) reversed course today, led by the sector we’ve been highlighting for some time – Retail (NYSEARCA: XRT).
In fact, the market news stream was buoyed by Retail Sector all time highs… instead of the emerging markets.
But the next question is: Do Retail stocks have the strength to continue if the market doesn’t rally with it?
Today the Retail Sector (XRT) had the market on its side… but the answer remains to be seen.
No bad news is good news for the market. That is today’s theme… but unfortunately that’s not a long-term solution.
For example, a lack of trade rhetoric enabled a bounce in the Turkish lira, and that seemed to relieve the market of its lingering concerns of Turkey’s plunging currency.
While the major averages all rallied, none of them broke out of their recent multi-day range. So, until they move higher, it’s hard to see why they should.
On the bright side, however, all but 1 of the 14 major sectors in our Big View Sector Summary posted gains, and the worst performer, Semiconductors (SMH), was merely unchanged.
Not only did all the sectors close up, but there are several that rallied enough to create some potentially interesting bullish patterns.
Clearly, retail stocks lead by $XRT up 2.3% is the brightest spot in the market. And since the largest component of the ETF is less than 2% of its assets, this is not an ETF that will move big because of only a few stocks.
This is more thanwe can say for most sector ETFs, and it bodes well for the health of the uptrend in retail.
In addition to the breakout pattern in XRT, Consumer Staples XLP reversed its recent pullback, closed over its 2-day range, and bounced off its 200-day MA.
Consumer Discretionary (XLY) also closed over its 2-day range.
IYT was also strong enough to trade well above its prior two days of consolidation before giving back some of those gains late in the day. The result, however, is a pattern that will look good if it continues higher.
Yesterday I said that there are several ways for a market like this to “wake up.”
- Big surprising bullish news.
- Change from nervous and disinterested to scared and oversold.
A big breakout in one sector isn’t surprising bullish news, but if the sectors can quietly set up for a day when several sectors breakout like retail, that would surprise the marketand perhaps get the money on the sidelines more interested.
It’s not here yet, but I’m not going to be surprised if it happens.
Twitter: @marketminute
The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
