The other day, my wife suggested we go to the mall to pick something up for our daughter. I usually give the look over the top of the glasses like 'What did I do to deserve this fate?' I went through the mall with a muted level of interest but then started to think about who is ringing the cash register as my wife and I are buying some perfumes in a very pink store. On my journey, I did notice one of the guys clothing stores had moved, Lululemon is getting a larger space, the Bay is renovating, and one of the anchor tenants continues to have the retail display skills of fatal detraction. As most of us know, spousal shopping is never go in and out for what we need. We always have to check something out on the other level at the other side of the mall.
However, as July approaches, I like to look at retail to see what has held up well through the spring and get positioned for what might work this fall. Here is a question. Can you tell from walking through the mall who is doing well or not well? I cannot make decisions with my infrequent visits and lack of knowledge of the latest fashions. I have to bundle up the stock charts for the retailers and products to decide from there. So after downloading the store listing for the retail mall off the website, I worked through what was public and private to create this list. It took a little research to figure out Luxottica owns Oakley, Sephora is private etc. But this is a simple template. Now, you might sort them alphabetically, or in the order they are in the mall. Personally, I just want to know who is successful and if I want to invest in retail, who is ringing the register day in and day out. So I sorted on the SCTR. If a stock is doing well now, we can pick a selection of stocks from the top area and we'll probably do ok heading towards Christmas. This will change a lot through the summer, so keeping a retail ChartList makes it very simple to continuously review the leadership.
Let's quickly look through the top charts of US companies and the top Canadian ranked companies. All of these stocks are in different SCTR groups, so the charts may be different, but it still points you to the best within a peer group as defined by the SCTR. I was surprised that Limited Brands (LB), Foot Locker (FL) and Under Armour (UA) didn't make the top ten!
The Luxottica (LUX) stock broke above 75 in February and has stayed there. They own Oakley, Lenscrafters and a few other eye glass shops.
Starbucks. SBUX. Jumped above 75 in January. There is a Starbucks in Safeway, another large Starbucks store in the mall and another in Willow Park around the corner. The investors are moving the stock, as it's up 25% in 5 months after hitting 75 on the SCTR.
Gamestop (GME) recent breakout! Moved above 75. Looks like an interesting pick heading into the fall with all the gaming out there.
Yum Brands (YUM) broke above 75 last month. Moved up $12 and now pulled back $5. Interesting if you think it will continue. I think it's a nice looking chart!
Disney (DIS) has broken back above 75 on the SCTR and has moved up 10% from there. Lots of activity in this one heading into the year end with Star Wars toy sales! Currently Tomorrowland and Avengers are rocking the box office.
LVMH. Lots of different lines of products in the stores. Breaking out from consolidation this week!
Men's Warehouse (MW) bought Joseph A. Banks who bought Eddie Bauer. Men's Warehouse broke above consolidation this week! It also broke above 75 on the SCTR rankings in mid May around $57, which looks like support on the consolidation.
Children's Place (PLCE) is doing all right. It's tough to hold though. This has as many potholes as the city with the best mayor in the world! But it is trending higher! You can buy it now only 5% higher than the March breakout above 75 on the SCTR.
As I sit here working in my LULU golf pants, I am reminded that this pullback in LULU is kind of big for a stock with an SCTR above 75. This is a good entry with a very close stop at $59.
The last of 10 is Express (EXPR). This stock is really just breaking above resistance. It is up 8% in a week with good volume.
Let's look at the top ranked Canadian listings. Hard to believe that one of the Canadian Telco's (BCE) with the world's highest cellular rates might be the top listed retailer!
The next one is A&W in the food court. Knocking it out of the park with their steroid free beef and chicken campaign. Not that I've been there...Just saying.
Oh yeah, the A&W chart (AW/UN.TO). This one is starting to wobble a little. We can see the SCTR dropped below 75 in late March, rallied back up and has now dropped down again. The up sloping trend line is the stop around $28. This could just as easily run to the upside so don't dismiss it. The trend line was pretty strong support on the last pullback in April.
Loblaws (L.TO) bought Shoppers Drug Mart in the spring of 2014. Even with all the weakness in Energy and Materials in Canada, the SCTR keeps getting weaker on this. Thats not a good trend, but sometimes the consolidation can lead to very bullish breakouts. We can see Loblaws has been in a horizontal consolidation. It is hovering just above the up sloping trend line and seems to be building a rounded top. Maybe that's too pessimistic and a flat top around $65 would be a different view. A break up and out would be very bullish. However, I don't like the continuous decline on the SCTR or the MACD.
The last one I'll cover is Canadian Tire (CTC/A.TO) as the SCTR ranking is only at 70%. The SCTR continues to drift lower, but Canadian Tire is a lot more than tires. They have the entire Forzani's business which includes sports equipment and we are not far from hockey season. With Marks Work Warehouse and the 'Walmart-without-groceries' Canadian Tire stores, there is no denying their dominance and continued out performance over the years. A break above 133 is a buy and a tight stop at the trend line around 128.
That wraps up the retail review. I hope I've demonstrated a few things here. The value of creating ChartLists. How you can set up themes in your ChartLists. You could easily add new names like AAPL, MSFT, JWN from other malls, but this example is a one mall experience. Some Canadian retailers, some US retailers. The power of sorting by SCTR is incredible and I think a superb tool for strength ranking. Hopefully the strength of the investor shows through in what is working and what is not. Price action is all I want to see and the ranking of investor love through the SCTR is very powerful. Sure beats using P/E.
I will be doing a webinar this afternoon at 4:30 EDT. I will walk through how this ChartList was created and generate ideas for other category groupings. We always cover commodities in depth (unfortunately they are all deep in the red!) and more thoughts on the overall markets. Click here to register. If you have any comments on this article, feel free to tell me the good and the bad. You can subscribe to these articles or most articles on stockcharts.com by clicking the subscribe by email or RSS on the top right. Track me down @schnellinvestor on twitter for other random charts and humour.
Good trading,
Greg Schnell, CMT
