There are a lot of definitions of a healthy market. My top definition, my number one sign, is broad participation. Key to this analysis? We don't get the broad participation all at once. We get rolling good breadth.
That's how I see this retail and energy sector move. Both had been dormant to negative all year. Both are coming on, in fits and starts, with nice moves to the upside.
I think that the retailers are reacting to the broad adoption of e-commerce as well as better mall traffic because people are feeling better about their stock portfolios, their job mobility and their house appreciation. Those all add up to a holly jolly Christmas and a lot of short covering. Of course some never got hit: Home Depot (HD) /Lowes (LOW) , Burlington (BURL) and Children's Place (PLCE) come to mind. They each have a compelling niche that was hard to "Amazon." I can throw in Costco (COST) but that one is more of a club success and certainly Walmart (WMT) which is an e-commerce ongoing success.
Even better is the comeback of Kohl's (KSS) and to a lesser extent Macy's (M) from the endangered species list. Let's add Footlocker (FL) to the good mosh pit of retail, although it didn't have enough to pull Nike (NKE) . The department stores, on the other hand, did enough to strengthen the hand of VF Corp (VFC) and PVH Corp (PVH) .
Oils? Simple: the price went higher and could be manipulated still higher by the Saudis to get a fabulous Aramco price. You know it is manipulation because we are pumping so much to go along with Iran and Iraq. Only a surge in business in China -- a la copper -- could otherwise explain this move.
These groups are reminders of the dynamic, solid bull that's going right into 2018. I am reluctant to sell any of these in these cohorts even as an XPO Logistics (XPO) , big e-commerce giant, has to be trimmed on a price appreciation goal.
Oil and retail -- hitherto incapable of going up together, excel here. That's strength and, at another time, would be regarded as inconceivable.
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