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Consumer Discretionary Stocks Get Rocked

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

Non-farm payrolls declined 467,000 for June, which was worse than expected. Stocks took the news hard with a broad based decline on Thursday. The major indices were down 2-4% on the day, while all sector ETFs were down over 2% with the Consumer Discretionary SPDR (XLY) leading the way lower. On the chart, XLY is on the verge of breaking support from its mid-May lows. With a double top taking shape, a break below this support level would target further weakness towards 19. The height of the pattern is subtracted from the support break for a target. As the most economically sensitive sector, relative weakness in the consumer discretionary stocks is not a good sign for the overall market - or the economy. This sector includes retailers, auto manufacturers, restaurants and homebuilders.

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More