Category: Consumer Discretionary

The return of risk-appetite.

Consumer Discretionary is ready to make a move.

Consumer Discretionary has been a laggard since January, but don’t let that fool you. There are plenty of opportunities in this diverse sector.

The Consumer Discretionary sector is dominated by a handful of huge names, but if you look beneath the surface, things look quite a bit different.

If there was one theme for January, it might have been the old market adage: From failed moves come fast moves in the opposite direction.

We were premature in our upgrade of the Consumer Discretionary sector last month. We believed the relative lows from the spring would act as support and offer a relief rally, but that thesis proved incorrect. Instead, the sector broke to new lows on both a relative and absolute basis:

Consumer Discretionary was weak in November, but so far, it’s been able to hold above the May lows on both an absolute and relative basis. For tactical investors, this looks like a good setup with clearly defined risk.