Group Overview:
The XRT is the most followed ETF in the retail sector, and the fund is not looking pretty. It now sits 14% off most recent 52 week highs and the very round 50 number, which was tough to get a feel on as the ETF bounced above and below the figure between June-August now looks to be stubborn resistance. It came within pennies of the number on 11/8, and since that session the fund is on a 7 day losing streak. Earnings from names in the overall group have been wobbly as of late, with names selling off even on perceived good news. Last week JWN fell nearly 14% on 11/16, but is finding support for the time being at the very round 50 number. M slipped more than 7% on 11/14, and WSM lost 11.2% on 11/16. HD reversed higher on 11/13, although still CLOSING slightly lower, and after todays finish is back to the lows of that earnings day. Tonight we hear from LB and URBN and tomorrow morning from TGT, BBY, LOW, TJX and KSS. Below is the ratio chart comparing the XRT to the S&P 500. It has taken a turn for the worse, even with consumer confidence numbers coming in very strong.
Casual Diners Bifurcation:
The casual dining space has been the focus of attention for many in the discretionary arena. The group has become smaller with lots of M&A activity over the years with SONC PNRA BWLD and BOJA to name a few being taken private. Names still trading have varying degrees of success and failure. CMG was in the headlines with Ackman’s involvement in the past and it reversed at the very round 500 number on 11/12, although the name is still higher by more than 61% YTD. RRGB is now down almost 50% off most recent 52 week highs, and this is AFTER a more than 10% move off lows recently at the very round 30 number. PZZA was in the news with the CEO ousted after controversial remarks, but that stock ran up 50% from the round 40 number in August before being halted at the 60 number last Thursday-Friday. The chart below best personifies the move from overall growth into value, as MCD is on a current 5 week winning streak gaining more than a combined 13%.
Examples:
The consumer has seemingly shifted its spending habits to experiences, rather than materials things. That is not my belief, but what I hear experts say in the media. I focus solely on the PRICE action and we can see chart examples where that thesis can be challenged. CWH is a name now down 64% from most recent 52 week. PII is off 33% from its most recent ascent and of course the markets overall weakness is contributing to these lofty declines. Below is the chart of SFLY and how it was presented in our 11/13 Consumer Report. It has been chopped more than in half, off 52% from its highs, and is a good example of why you should not fall in love with charts. Previously it displayed a powerful run up traveling between the precise 40 and 100 numbers during a 24 of 30 week winning streak the weeks ending between 11/17/18-6/8/18. Since then it has lost value 16 of the last 23 weeks, including a 14.6% slump last week. An 8 session losing streak is in place and a full circle move to the round 40 number may be in the cards. What a picture that would be, pun intended.