Consumer Collapse:
After last week’s shellacking just one major S&P sector is in the red in 2024 and that is consumer discretionary down 1%. The WEEKLY chart below of the XLY shows a bearish rising wedge with higher highs and lows since the summer of 2022, but the coiling action is likely to result in a volatile fashion. Some may state that the XLY is just representative of only AMZN and TSLA, but the broader XRT is licking its wounds as well. But that fund fell 3.3% Friday not only completing a bearish island reversal but breaking BELOW a bullish ascending triangle, and we know from FALSE moves come fast ones in the opposite direction. It was not long ago TSLA recorded a one-hundred handle surge between mid-June and early July, but that has evaporated as quickly as it began. It is now touching the upward-sloping 50-day SMA for the initial time following the breakout above the inverse head and shoulders formation at the very round 200 number, often an ideal entry point. Once again the WEEKLY doji candle the week ending 7/12 was the canary in the coal mine (as well as the quick failure attempting to break above the double bottom base) for the change in the prevailing trend. AMZN which reacted to earnings Friday recorded a bullish hammer as it filled in the 2/1 earnings-related gap CLOSING just below the 200-day SMA. These 2 XLY giants have been wounded. We will find out next week if it was mortally so.