Sacred Cows Beware

On the one hand, we certainly want to closely track emerging winners in retail, as that sector will always be in the crosshairs of the "creative destruction" which runs parallel to evolving consumers' preferences. OLLI is a name we looked at previously as one such example, as is the rebirth of BBY. 

But on the other hand, we do not want to turn a blind eye to the "sacred cows" of the retail compile, or the prominent brands which have likely been serving as a safe house for fund managers amid the legitimate carnage in the retail sector at-large. 

In particular, the likes of COST HD LOW, even SHW, seem to fit the bill as being dominate retail brands. However, at this moment in time, after years on end of gains for one and all.

On the LOW weekly chart, below, just after earnings this morning, we can see the potential for the highlighted, massive rising channel to resolve lower below $71 and cement a change in character for the worse. HD has been weakening in its own right since that firm reported earlier this month, too. And, actually, Home Depot is sporting a much more pronounced, steep prior uptrend than LOW is. 

Similar comments apply to COST and SHW. 

Ultimately, these sacred cows are excellent businesses. But they are also crowded trades and could easily have reached a tipping point where the market fully recognizes and appreciates their dominance. MA and V in the credit card arena may not be far off from such a moment in time, as well.

However, unlike MA and V, we at least have some actually technical evidence via HD and LOW that some type of correction is not only underway but still in progress.