5) Lastly, the Media industry group, a leader for much of the Bull Market, has moved down to start the year. Madison Square Garden (MSG) is one of the weaker components, as evidenced by deteriorating relative strength (bottom panel of chart below) since last July.
Overall, this broad-based weakness in the Consumer Discretionary sector is troubling, especially when viewed in light of other risk factors that have been building in recent weeks: defensive leadership and bond strength. U.S. equities have proved their resiliency a number of times over the past year but I doubt they will ignore consumer weakness for long. At 70% of GDP, consumption expenditures are by far the most important segment of the U.S. economy. Until we see improvement here, the risk of a correction is elevated.
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