Wednesday morning brought some love to the US economy.
The January retail sales rose 3% month/month vs. the +2% estimated.
The breakdown fascinates me.
With food inflation where it is, and egg prices the big headline, the leader for today’s number is FOOD, particularly eating out.
At the bottom of the chart, or with the least rise in sales by retail consumers, are groceries and gasoline.
Makes for some head-scratching, really. Considering folks bought cars and ate out, but did not gas those cars much or buy a lot of food to cook at home with.
Is the whole country buying Teslas and eating at Wingstop?
Both of those stocks did extremely well, with Wingstop (NASDAQ:WING) making new 52-week highs and Tesla (NASDAQ:TSLA) up more than double from its January low.
There are Retail Sales and Then There Is Granny Retail
Retail through the eyes of our Granny of the Economic Modern Family is a great go-to as the basket of SPDR® S&P Retail ETF (NYSE:XRT) has a good blend of e-commerce, brick-and-mortar, consumer staples, and discretionary goods.
Notice on this weekly chart that the 23-month moving average is much higher than current levels. Another point is that with Wednesday’s ebullience, the price remains below last week’s high.
Furthermore, last week’s high remains below the week prior. So, XRT is making lower highs each of the last 3 weeks but also has found a basis of support at 68.00.
Moving down to our Leadership indicator, Retail is outperforming the benchmark which makes sense given today’s retail sales number.
And that is a good thing given Granny resides next to the Russell 2000 as the king and queen of the US economy.
However, neither is proving to us yet that they are entering a growth stage beyond the 2-year business cycle high and can sustain this rally.
Finally, Real Motion on the bottom, shows a negative divergence. While on the price charts, the 50-DMA (blue) is above the 200-DMA (green), the momentum chart looks aslightlydifferent.
The 200-DMA is above the 50-DMA, so not as strong a phase. Secondly, the momentum red dots are below the 200-DMA while the price is above it on the top chart. And the momentum skips along the 50-DMA.
Although the momentum is weaker, it does not necessarily mean the price cannot rise. However, it does suggest that the overhead monthly moving average resistance is palpable, and bulls can have some fun but should also remain vigilant.
ETF Summary
- S&P 500 (NYSE:SPY): 420 resistance with 390-400 support.
- iShares Russell 2000 ETF (NYSE:IWM): 190 pivotal support and 202 major resistance.
- Dow Jones Industrial Average ETF Trust (NYSE:DIA): 343.50 resistance 338 support.
- Invesco QQQ Trust (NASDAQ:QQQ): Nice comeback-still 2 inside weeks working, so watch 311 as a good point to clear or fail from.
- S&P Regional Banking ETF (NYSE:KRE): 65.00 resistance 61 support.
- VanEck Semiconductor ETF (NASDAQ:SMH): 248 cleared now support-254.60 last week’s high.
- iShares Transportation Average ETF (NYSE:IYT): The 23-month MA is 244-now resistance 228 support.
- iShares Biotechnology ETF (NASDAQ:IBB): Sideways action 130-139 range.
- S&P Retail ETF (NYSE:XRT): 78.00, the 23-month MA resistance and nearest support 68.00.