• Trading 101: Consumer Discretionary Names Looking to Move Higher?

    by  • July 23, 2013 10:23 am • Trading 101 with Peter Bryans • 0 Comments

    If you observe the SPDR Consumer Discretionary chart below (XLY) you’ll notice that the monthly chart shows the sector making new all-time highs along with the rest of the market. The XLY also seems to be finding resistance at the $60 level–a nice, round number that could come into play here in the next few days. In case you weren’t aware, the XLY has been one of the leading sectors so far this year, posting a YTD gain of just over +26%.

    (courtesy of eSignal)

    Looking more closely at the daily chart (below) we can see that it has indeed been moving sideways. The intraday chart (on a 30-minute timeframe) that follows this daily chart, shows how sideways this action has been. Since the gap higher in the market on 7/11, Consumer Discretionary names have been churning sideways.

    (courtesy of eSignal)

     

    (courtesy of eSignal)

    The SPDR Retail ETF (XRT) is showing similar behavior. I want to focus more closely on the retail sector (XRT daily chart featured below) as there are three names that have caught my attention as of late. Those would be Kohl’s (KSS), Macy’s (M), and Nike (NKE).

    (courtesy of eSignal)

    KSS has made a contained pullback the last two weeks of trading, and made a nice move higher on bullish volume just yesterday (7/22). The stock has filled the gap that was made lower in November of 2012, and looks as if it has found support near this area. As is always the case during earnings season, be careful putting on any new positions with these quarterly announcements. KSS is set to report before the market opens on 8/15.

    (courtesy of eSignal)

    I also like this recent pullback in Macy’s (M), as it could present a possible buying opportunity. To be sure, the $50 level has been a key point of resistance in the short-term and the stock has struggled to take out this level. That being said, given that the pullback has not been all that violent, I could see Macy’s making another run at this level. Perhaps earnings is the catalyst that pushes this stock higher.

    (courtesy of eSignal)

    Finally, Nike (NKE) is also at an interesting juncture. The trendline from the November 2012 lows has been respected on multiple tests, and it appears to be forming an ascending triangle. One could argue that this is actually a symmetrical triangle, and the direction in which NKE is set to break out is uncertain. Nike just reported earnings in late-June, but has made little progress since this time. I’d be on the lookout for a big move in this name in the near future, as a lot of the Consumer Discretionary and Retail names out there could continue to be market leaders.

    (courtesy of eSignal)

    Good luck trading.

    About

    Peter Bryans joined the Schaeffer's Investment Research trading team as a Trader in April, 2012. A graduate of the Fisher College of Business at The Ohio State University -- where he concentrated in Finance -- Peter previously held internships with an insurance broker and a wealth-management firm. In his current role, Peter trades a variety of our real-time option services and also hosts our "Options Apprentice" weekly webinar presentations.

    http://www.schaeffersresearch.com

    Leave a Reply