After hitting a new all-time high in the first days of March,
the consumer discretionary sector has been slowly bleeding lower
as skittish investors pull back on growth stocks.
The Consumer Discretionary Sector SPDR (NYSE:
) and Vanguard Consumer Discretionary ETF (NYSE:
) are two of the largest ETFs that track a basket of companies
engaged in non-essential consumer goods or
This sector is typically dominated by media, specialty retail,
entertainment, and automobile manufacturers that end to be more
sensitive to consumer activity during different phases of the
2 ETFs For The 2014 Masters Tournament
Both ETFs were stellar performers in 2013 as growth and
momentum investors piled into this arena. However, the
combination of profit taking, higher volatility, and a
shift to defensive sectors
has prompted an exit from high flying stocks like Amazon (NASDAQ:
) and Priceline Group (NASDAQ:
Both companies are top holdings in these ETFs and have
declined significantly from their 2014 highs.
A specialty group of consumer discretionary stocks that bears
close attention are consumer retail companies. The SPDR
S&P Retail ETF (NYSE:
) tracks an equal-weighted mix of 100 companies in apparel,
specialty, and automotive retail stores.
This ETF has decoupled from the price action of the broader
market and just recently pierced its 200-day moving average on
the down side. So far this year, XRT has declined nearly 6
percent and still has additional room to retest its January
Clearly investors are concerned about weather related problems
and other seasonal factors clouding the picture for retail stocks
On Monday of next week, retail sales numbers for March will be
released that will be a key wrap-up of consumer activity in the
first quarter of the year.
That economic statistic is likely to play an important role in
the future price action of these temperamental ETFs.
The consumer discretionary sector appears to be in the midst
of a pullback that will test the resolve of the bulls moving
In order to stabilize, we are going to need to see aggregate
retail statistics and key company earnings or product
announcements come in better than expected over the next several
Any additional bumps in the road may be a leading indicator of
economic activity that sends this sector even
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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