As my followers know, I've been following Stitch Fix and Revolve as both stocks take a dive today.
The plummet comes, surprisingly, just a day after strong retail sales data for June. It was the strongest quarterly retail sales growth since they started recording this data in 1992! However, that's mostly because Q1 was so weak that Q2 looks strong by comparison. Year-over-year, the numbers look much weaker.
Most of the strength, however, comes in the retail and consumer staples sectors, while the weakness is mostly in cars, building supplies, and furniture. (Incidentally, that means grocers and retailers are likely to beat estimates on next earnings, while hardware and auto companies are likely to miss them.) Overall, this should be good news for retailers like Revolve and Stitch Fix.
However, not only Stitch Fix and Revolve, but also the whole Internet retail sector is falling today against the S&P 500. That's partly because Internet retail is approaching highs from last May and the previous June-September, and it's partly because Internet retail got overbought against the S&P 500 on its hourly chart.
However, we're still above our moving averages and our MACD signal line. The sector will oscillate downward in the short term, especially amidst overall market weakness, but it should continue to outperform in the medium term. With strong retail data and excellent profitability, I remain confident in companies like Revolve and Stitch Fix.
The plummet comes, surprisingly, just a day after strong retail sales data for June. It was the strongest quarterly retail sales growth since they started recording this data in 1992! However, that's mostly because Q1 was so weak that Q2 looks strong by comparison. Year-over-year, the numbers look much weaker.
Most of the strength, however, comes in the retail and consumer staples sectors, while the weakness is mostly in cars, building supplies, and furniture. (Incidentally, that means grocers and retailers are likely to beat estimates on next earnings, while hardware and auto companies are likely to miss them.) Overall, this should be good news for retailers like Revolve and Stitch Fix.
However, not only Stitch Fix and Revolve, but also the whole Internet retail sector is falling today against the S&P 500. That's partly because Internet retail is approaching highs from last May and the previous June-September, and it's partly because Internet retail got overbought against the S&P 500 on its hourly chart.
However, we're still above our moving averages and our MACD signal line. The sector will oscillate downward in the short term, especially amidst overall market weakness, but it should continue to outperform in the medium term. With strong retail data and excellent profitability, I remain confident in companies like Revolve and Stitch Fix.
