While Tuesday I wrote about the strength of junk bonds in the face of risk-off ratios (TLT v. SPY, HYG), today, I am still quite concerned about Granny Retail or the consumer sector.
Investors have hopes that Nvidia’s (NASDAQ:NVDA) earnings can help the market survive.
But let us look deeper into how Nvidia reflects (or not) the consumer.
Are consumers upgrading computers? Are they buying AI assistance?
Considering all the fears of higher food, auto and service prices, we still maintain it is not only what folks buy, but how much they buy that will impact the economy and the market most.
Plus, tariffs are surely spooking consumers as well.
This Friday (for 24 hours), there is a call for a nationwide economic blackout.
While the nationwide economic blackout applies to all discretionary spending, the organizers are targeting specific retailers.
This includes:
But participants are also asked to refrain from spending money on fast food or gas.
"If we disrupt the economy for just ONE day, it sends a powerful message.” One could say it is the direct opposite of Black Friday.
One day in the US concerning companies might not mean that much as global shoppers are not involved.
Best Buy has stores in Mexico and Canada. Tariffs will have an impact.
However, if this is the start of a trend, bigger issues will pop up.
Ultimately, the chart of XRT tells the story.
The daily chart confirms the Distribution phase.
The bounce from the big sell-off last Friday has been unimpressive. 
On the weekly chart (not shown) the 200-week moving average sits at 74.00. However, the slope is negative
After that, the next big support is at the 23-month moving average at 71.50.
So, while there is support on the way down, the bigger picture is that momentum has continued to grow more bearish and the underperformance to the SPY is notable.
Can Nvidia save the consumer?
Only if XRT can rally back over 77 would we consider that this correction is over.
ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
- S&P 500 (SPY) 590 support 599 resistance
- Russell 2000 (IWM) 2025 low made Tuesday at 213.49-but closed above
- Dow (DIA) 432 support must hold
- Nasdaq (QQQ) 510 support 520 close resistance
- Regional banks (KRE) 60 area support
- Semiconductors (SMH) 237 has support but now needs to clear 241
- Transportation (IYT) 69-70 support
- Biotechnology (IBB) 140 resistance
- Retail (XRT) 74 major support and until it clears 77 still looks weak
- iShares 20+ Treasury Bonds (TLT) 90 now support