Karpel’s Corner: The Economy and the Consumer

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

Retailers. Restaurants. Automakers. When you hear mention of these sectors, the economy and the consumer are sure to come to mind. The consumer, which is really the lifeblood of the economy, reached new highs toward the end of August but was under pressure throughout September. That slide came to an end on Friday.

Take a look at the Consumer Discretionary ETF ($XLY). Friday’s action was a clear bounce off of support at $65. On the surface, this action could be taken as slightly positive. Yet new highs in consumer names have not confirmed a jump to the upside.

In this new earnings season, big names like Macy’s ($M), Nordstrom’s ($JWN), and TJ Maxx ($TJX) need to continue their momentum, with volume, if we are going to see the consumer space lead the market to the upside.

The Small Caps have been in a free fall with the Russell Small Cap Index ($RUT), dropping 9 percent over the last month. We did see nice recoil Friday. If that continues, it could be the makings of a decent bounce.

See you next time at the Corner!