Cyclical Sectors Feeling Pressure: Regional Banks
Cyclical Sectors Feeling Pressure: Homebuilders
Cyclical Sectors Feeling Pressure: Steelmakers
Cyclical Sectors Feeling Pressure: Retailers
Click to Enlarge The Retail SPDR (XRT) — which holds stocks including Staples (SPLS) and Big Lots (BIG) — also has been struggling to stay above its 200-day moving average since April as the U.S. consumer his showing signs of fatigue. Retail sales recently disappointed, with sales ex-autos and gas dropping outright in April over March. The weakness looks set to continue with wages stagnant, short-term credit on the rise and the savings rate dropping. All of this suggests household budgets are under pressure. With roughly two-thirds of the U.S. economy still dependent on retail spending, the lack of performance in the XRT is a nagging sign that all is not well.
How to Play It
Click to Enlarge As a result of the lingering weakness, short side opportunities are presenting themselves in these areas. I recommended the X stock June $25 puts to my Edge Pro clients back on May 23. The contracts are currently up more than 85%. Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm.