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Consumer discretionary gets off to a strong start

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Updated

The Consumer Discretionary sector posted very strong performance in January as the Direxion Daily Consumer Discretionary Bull 3X Shares (WANT) returned more than 30%, which is especially impressive given that we had a government shutdown during most of January.

The rally was led by solid performances in some of the sector’s largest weightings, including Amazon, Home Depot, Nike, Starbucks, Booking Holdings, and TJX Companies.

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The primary concern surrounding the consumer discretionary sector, like every other sector, is a trade deal with China. A deal would likely send the majority of the stocks in this sector higher and help ease the pain of deceleration in earnings growth, which can be attributed entirely to the changes in the tax code that went into effect in 2018. The bottom line: with low unemployment but a slower economy, can the consumer keep spending? Will they WANT (3X Bullish) more goods and services or will they PASS (3X Bearish)?

Source:Bloomberg.12/24/18-2/04/19 Past performance is not indicative of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For standardized performance, click here.

Conclusion

Who doesn’t love a comeback—and especially one that makes you money? But this bounce has been vicious and, in many ways, reasonable. Earnings were not as bad as feared, and neither were outlooks. But let’s be honest—they weren’t great either. So this is a good time to reassess your portfolio, and Direxion has just the right tools to help you.

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