Big Breakout For Brick-And-Mortar

Maybe the summer doldrums have finally set in, and the market is marking time and waiting for Wall Street royalty to return from the Hamptons. Yesterday, saw mixed signals from the market as the so-called “fear index,” the CBOE Volatility Index (VIX) drifted to levels not seen since January.

The inference is an idyllic situation where investors haven’t a care in the world, and stocks are on autopilot. However, there are worries and anxieties that didn’t exist back in January when the market was rocketing higher, only to hit a brick wall when President Trump went to Davos (January 26). And when Wall Street was afraid Main Street was making too much money (February 2).

Market breadth is more cautionary as well.

Yesterday, there was decidedly more declining volume than advancing volume of the New York Stock Exchange and the NASDAQ Composite.

Of course, NASDAQ keeps trading without a care in the world. Just a few sessions after Facebook’s (FB) big miss, the index has gone on a run; in fact, it had seven straight positive sessions.

Wall Street has always pointed to a low and declining VIX as a contrarian signal. I have never made any money trading the VIX, which seems to tell me what I already know and can discern watching the tape.

Brick-and-Mortar Big Breakout

I’ve written about and discussed Consumer Discretionary (XLY) stocks for many months and called the rebound in brick-and-mortar names. Some of those moves were so huge we took several positions off the table. The underlying theme remains, and we could see brick-and-mortar names achieve the kind of technical breakout that attracts the hot money crowd.

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I like the SPDR S&P Retail ETF (XRT) as the index that best reflects brick-and-mortar retail. XRT has some key names, but Amazon (AMZN) is still 20% of that index.

I hope all investors are already positioned, even overweight, brick-and-mortar names on value, and now, as potential momentum ideas.

Today's Session

The major indices are relatively flat this morning.  Let's see how the morning goes.