Consumer Discretionary
Hello friends. The Consumer Discretionary ETF has suffered severe losses this year due to the fact that consumers are being drained of disposable income to be spent on things that are not "essential". If you can choose between watching Netflix and eating food, any sane human would choose to eat food. And the ones that would not, would shortly die off.
However we are starting to see signs that the XLY sector could be ready for a brief relief rally.
Inflation is starting to crash rapidly, and I have a strong conviction that July's numbers won't be nearly as high as people seem to think they will. In fact, I am expecting that we could see a negative CPI print. We will know on July 13th whether this is the case. If that happens, it will ease off some of the pressure on consumers wallets, which in turn will help this ETF.
The seasonality is positive for the next two weeks.
Insiders are starting to load up on XLY, which lead to gains within a 1 month time period 100% of the time (sample size of only n=3)
The increasingly high component correlation is also interesting, since it means that investors are going full Monkey Brain Scared Mode, and mashing the big red SELL button based on nothing but fear on every asset that is falling. From a backtest of every other time it has crossed above 0.7 (70%) correlation (n=6), we saw prices increase over the course of the next month 83% of the time.
The idea here is to simply buy XLY, and then sell it around 1 month later. So we can go ahead and buy it right now, and then sell it right at the end of July. The stop loss is optional.
Thanks for playing.
However we are starting to see signs that the XLY sector could be ready for a brief relief rally.
Inflation is starting to crash rapidly, and I have a strong conviction that July's numbers won't be nearly as high as people seem to think they will. In fact, I am expecting that we could see a negative CPI print. We will know on July 13th whether this is the case. If that happens, it will ease off some of the pressure on consumers wallets, which in turn will help this ETF.
The seasonality is positive for the next two weeks.
Insiders are starting to load up on XLY, which lead to gains within a 1 month time period 100% of the time (sample size of only n=3)
The increasingly high component correlation is also interesting, since it means that investors are going full Monkey Brain Scared Mode, and mashing the big red SELL button based on nothing but fear on every asset that is falling. From a backtest of every other time it has crossed above 0.7 (70%) correlation (n=6), we saw prices increase over the course of the next month 83% of the time.
The idea here is to simply buy XLY, and then sell it around 1 month later. So we can go ahead and buy it right now, and then sell it right at the end of July. The stop loss is optional.
Thanks for playing.
Note
Take profit is also optional. We aren't using either the TP or the SL in our trade, but some traders may have more strict rules about risk, and this is fine for them.Note
Note
Crude oil and gasoline both just took a nosedive. This should be good for XLY because it means that consumers won't waste so much money at the pump, and now they can spend it on things they truly desire.Note
Taking some profit off. Closed half the position @ $142.45, a good increase of $5.50 from the entry @ $136.95Note
Trade closed at a great profit!Note
Bought the low and sold again today.Note
Let's place bids @ $141.00
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.