Last Years Leader ($XLY), Now Becoming a Laggard

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!

The consumer is the back bone of the economy and consumer discretionary stocks were the leaders in 2013. How times have changed. This all important offensive sector is now the laggard of 2014.

The Consumer Discretionary ETF ($XLY) peaked just below the early September high and then moved sharply lower on Tuesday. Granted the sector has been extended, running up in October almost 10 percent. I believe a pullback could be healthy. But how far?

The break of the 200-moving average on October 30th was initially worrisome, then discounted that challenge. But if we have a close below this level, that would put the ETF back below the 200-day average, and be quite negative.

Watch the action closely. If the $XLY continues to show relative weakness, it is a sector to be avoided.

See you next time at the Corner!