Consumer discretionary sector breaking out

 

xly

Consumer discretionary stocks are on the move. Above is the SPDR XLY discretionary ETF clearly illustrating this breakout. Within the discretionary sector, its sub sector, retail stocks, are leading the way in an even more aggressive breakout—see the chart below for the retail ETF.

xrt

 

The small capped consumer discretionary stocks are also looking good (PSCD-chart below). They were moving bearishly for most of 2014, but broke that near termed downtrend (blue line, chart below) and took out the old high after the broad market selloff in October. This ETF is thinly traded and holds an element of micro-caps, in addition to the smaller capped stocks. So it’s a more risky ETF than the large capped stock ETF’s mentioned above. But it shows us that the movement in the discretionary sector is likely deep and sustainable.

pscd

Seasonally, this sector tends to outperform the broader stock markets over the next 5-6 months. My suggestion is to wait until next week to see how the “Black Friday” retail weekend went before considering  buying into either the large capped or small capped end of this sector.

2 Comments

  • You had mentioned on a previous show that you liked CGI Group. I did not buy in. It looks like it has broken through resistance. It is now $41. Would you still recommend a buy at this level? With the possibility of a correction next year would you buy now or or wait until it came back to support? Thanks.

    Reply

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