It seems that consumers just can't do enough discretionary spending, despite pundits' worries about effects of higher fuel prices.
In the S&P 500 and 600 indices, the sector is beating all others in terms of gains this quarter. In the mid-cap 400, it's taking a back seat to the industrials.
Top consumer discretionary holdings in the small-cap sector include Men's Wearhouse (MW), Coinstar (CSTR), Wolverine Worldwide (WWW) and Select Comfort (SCSS).
Of those, Select Comfort has been highest on my radar and I wrote about it last week as the stock was trading near all-time highs. In Monday's sessions, it was holding above key moving averages, but remained extended and out of buy range.
Men's Wearhouse, though showing declines in recent weeks, continues to carve a possibly bullish chart pattern. It's gradually pulling back to its 10-week average, so far holding above that key price line. At the moment, the next buy point could occur as the stock regains its previous high of $40.97.
Shoemaker Wolverine Worldwide has some ground to tread before clearing its most recent buy point, above $40.76. It's been crafting an area of price consolidation since July.
The stock pulled to a low of $30.77 in August, undercutting the trough of the prior base. While it's not great for investors who opt to hold through that kind of consolidation, that type of price action often serves as a shakeout for investors lacking in conviction and paves the way for more value-oriented buyers to snap up shares.
When I see one of the S&P sectors outpacing the others, I like to look beyond stocks included in the index, to see where other leadership may lie. Generally, I can find growth stocks with even better potential than some of the index leaders.
Francesca's Holdings (FRAN) is a recent IPO that bolted 21% last week in more than double average volume after better-than-expected quarterly reports and a bullish outlook.
This is exactly the kind of small-cap name that I track. Prior to the report, the women's clothing retailer had been showing some price potential, getting solid moving average support.
For more aggressive traders, the stock is buyable between $28.50 and last week's high of $32.32. But I would need to see support at that $28.50 level to continue holding. More conservative or risk-averse investors may want to wait for a more prolonged consolidation with moving average support.
A consumer-discretionary small company trading in a tight weekly range near all-time highs is Buffalo Wild Wings (BWLD). It's holding well above key moving averages. Here, too, more aggressive traders could enter a position, but be prepared to cut losses if the stock breaks support at $85.28.
Shares of the chicken-wing purveyor gapped up 17% last month after its quarterly earnings results. Commodity input costs -- specifically the wings -- are a perennial concern for this company and its investors. On Friday, Wedbush downgraded the stock to Neutral from Outperform, citing concerns about those costs.
The stock gapped down 3.5% on the demotion, but regained some of that ground in Monday's session. Downgrade-driven declines are frequently short-lived, so that may turn out to be the case here.
