After finishing last week on a low note, the S&P 500 has bounced back a bit this week, on track to close the week higher by more than 0.8 percent. But traders who have been following the 2017 rally closely may be doing a bit of a double take this week when they look at some of the stocks that are leading the bounce and some of them that aren’t.
Among the top performers this week, Facebook Inc FB 0.4%, Amazon.com, Inc. AMZN 0.55%, Netflix, Inc. NFLX 0.15% and Alphabet Inc GOOG 0.52% GOOGL 0.51% are nowhere to be found. In fact, all four FANG stocks, which have been top performers throughout most of the year, have underperformed the market this week.
Surprising Leadership
So which stocks have been leading the rally? Dillard’s Inc. DDS 0.54% is up 4.3 percent. Kohl’s Corporation KSS 1.58% is up 4.9 percent. J C Penney Company Inc JCP 0.47% is up 5.9 percent. And Macy’s Inc M 2.64% is up 8.0 percent in the past five days.
In fact, the SPDR S&P Retail (ETF) XRT 0.76% is up 2.4 percent this week, nearly tripling the return of the overall market. The stocks mentioned above have been some of the worst-performing stocks in the market year to date, down between 7 and 55 percent in 2017.
What’s Going On Here?
Is this week’s trading action the beginning of the big rotation from tech stocks to retail stocks? Probably not. Instead, it may simply be both the bull market in tech and the bear market in retail taking a bit of a breather and pulling back a bit as longs and shorts take some profits.
Earnings expectations for tech stocks may have gotten a bit too high, while expectations for retailers got a bit too pessimistic. Whatever the reason, it’s far from time for tech longs or retail shorts to panic. SPDR S&P 500 ETF Trust SPY 0.13% bulls, however, will be watching closely for technology or another sector to take over the leadership role next week. The fundamentals in the retail sector give…
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