Adjusting to a Slower Pace

The broad market appears to continue its attempt to catch its breath after the last few weeks of wild swings and reversals. Also note that we have some major global and Fed-related headlines and events mostly in the rear-view mirror now (although the political headlines are rather fluid and will of course persist), as well as the fact that we have moved through the heart of earnings season now. 

All of those factors point to the market taking a respite this week, though we must not fall asleep at the switch if the S&P 500 Index fails to hold the 2,700 area into pullbacks, which it has thus far. 

Regarding sector rotations, retail is still a hot number, with Macy's latest earning rally reinforcing the long-term case for the worst being over for the iconic department store. Some more prominent new age winners in retail like FIVE LULU OLLI continue to dazzle, as well.

On that note, the consumer discretionary stocks, often overlapping with retail, are on watch for an imminent weekly chart breakout, as seen on the XLY sector ETF weekly timeframe, below. 

This working thesis jives with recent earnings winners like CMG SHAK WING, and steadily improving names like DNKN. As noted yesterday, higher rates and gas prices are not always immediately reflected in the market, in terms of squeezing consumers (especially if the economic is sturdy, as bulls argue).

Hence, opportunistic consumer names are still on my long radar, albeit with a pedestrian pace to this morning's market.