Gambling at Your Discretion

Facebook reports earnings tonight, which is sure to capture many headlines. The social media titan has been an undisputed leader in a market experiencing rather narrow leadership of late, along with AMZN GOOGL NFLX PCLN, and a few others. 

Still, I am more inclined to focus on the XLY in the coming days and weeks. The XLY is the ETF for the consumer discretionary sector, featuring several prominent firms which have enjoyed rather steep multi-year uptrends. In particular, XLY heavyweights AMZN DIS SBUX have my attention the most, with Disney reporting earnings tomorrow evening after the bell. 

Amazon, as we know, has already reported. And observing the monthly chart, below, the stock could easily be in a "blow-off" phase here, with the November monthly candle thus far entirely outside the upper Bollinger Band, which is a uniquely overbought occurrence indeed. 

And so the argument is not whether Amazon is a great firm or not---It most assuredly is, and the market is the final arbiter in that regard. 

But what AMZN shoots the moon, the XLY is printing a bearish engulfing candlestick today, as SBUX is weak, along with a few other XLY big guns, and DIS sells off before earnings. To see the AMZN strength ignored by its peers may be a sign that the steep trend is running on borrowed time, especially when the praises of the firm and its stock are louder than ever.