5/27/22 Retail Winners, Small Cap Breakout

News:

Markets posted another day of solid gains ranging from +2.8% for the Nasdaq to +1.6% for the Dow Jones.

Consumer Discretionary was the top-performing sector.  Several retailer, including Macy’s (M) +19.3%, Dollar General (DG) +14.0%, Dollar Tree Stores (DLTR) +21.9%, and Williams-Sonoma (WSM) +12.8% provided better-than-expected guidance.

The gains were broad with Communication, Technology, Financials, and Industrials all gaining more than 2% on the day.

Real Estate was the only sector to finish in the red, and it was practically flat.

According to a CNBC report, housing inventory has climbed amid higher interest rates. And pending home sales declined in April.

Technicals:

The Russell 2000 represents the smaller cap stock. You can clearly see a breakout from its narrowing trading range on the chart below.


IWM Daily Candles – Chart via thinkorswim

That’s a positive sign for the bulls.

The VIX remains high, but other indicators are neutral ahead of the holiday weekend.

I’m not married to this rally. Daily gains of ~3% are not part of normal bull markets.

That being said I see no reason that the market can’t move higher … we’re just not in a bullish time of year.

Timing:

We are on the cusp of the Memorial Day holiday weekend.

Markets will be closed on Monday. Tuesday will close out the month of May.

Futures are up this morning. I expect lower volume as many people head to the beaches early.

Be on the lookout for a special Memorial Day message from us on Monday. And our June outlook on Tuesday.

Enjoy the holiday!

Watchlist:

*Low Float

^Open Position*AMR has support at $160
TNK has support at $20
CNCE has support at $5
^HDSN has support at $9, resistance at $10
SD is on watch
LPG has support at $16
PANL has support at $6, resistance at $6.65
MOD is on watch
SGML has resistance at $18
PLAB has resistance at $20
ESTE has support at $17
TTI is on watch
HRB has support at $34
UNM support at $34, resistance at $37
AR is on watch

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