Retail Gets Some Swagger Back

Another opening gap higher in the broad market is surely putting heat on top-callers over the last week or so, especially those wading into the time-sensitive options part of the water. 

Still, as I write this I see quite a few healthcare and software names cooling off and coming in a bit. Guardant Health (GH), for example, is a truly promising healthcare winner which we sold yesterday, expecting some type of backing and filling before a potential new long entry. Similar comments apply to software studs like COUP MDB and many more, flashing red. 

Naturally, some profit-taking after several explosive sessions higher following a rough month of May is to be expected. But after that we must hone in on the underlying strength of dip-buyers to place a firm floor back under these growth monsters in tech, emerging as future leaders to unseat the "FANG" gang. 

Another noteworthy aspect of this morning's action, thus far, is the distinct rotation down to retail laggards. For a while now, the XRT sector ETF for retail has been a thorn in the side of general arguments that the consumer is doing well. But now we have clear outperformance this morning as the tech leaders cool down and retail perks up. 

To be fair, LULU earnings tomorrow after the bell could be a sector mover. However, I see a name like Stitch Fix, which broke many bulls' hearts in 2018, as being an ideal turnaround candidate. SFIX remains heavily-shorted but with a cutting edge, growth business model in retail. The stock gapped up each of its last two earnings reports and it squeezing above its 200-day moving average as we speak. 

Just as with the broad market last week, retail bulls need to start somewhere. And this morning's rotation gets some much-needed swagger back into the lagging sector.