Despite tracking a troubled sector, consumer discretionary exchange traded funds (ETFs) have managed to stay afloat for much of this year. Now that the holidays are here, it might be time to go ETF shopping, too.
One sign? The holiday shopping wars are kicking off earlier than ever, it seems. Retailers are scrambling to dish out the bargains and lure shoppers who are ready to do some spending. Cases in point:
- Toys R Us is kicking off Black Friday…on Thanksgiving.The toy retailer said doors will fly open at 10 p.m. on Thanksgiving Day, the earliest it has ever kicked off its holiday “door-buster” deals.
- Sears (NASDAQ: SHLD) said it is also opening on Thanksgiving.
- Walmart (NYSE: WMT) announced Thursday that it will offer free shipping on nearly 60,000 online items through Dec. 20. This move made ripples through the market. Don’t be surprised if you see other such deals from the other online retailers.
- Target (NYSE: TGT) is going to try again with its enormously popular $3 appliance deals. Might want to bring extra padding for some bruise protection.
Overall, analysts think the consumer discretionary sector has enough power to carry it through the holidays, Chris Deiterrich for The Wall Street Journal reports. In fact, the sector is closely testing highs not seen since late 2007. [Consumer Spending Powers Consumer Discretionary ETFs.]
Consumer discretionary happens to be the best-performing sector on the S&P 500 this year, up 21%, and are responsible for a large chunk of index gains. In the last year, two of the best-performing ETFs backing the sector were Vanguard Consumer Discretionary (NYSEArca: VCR), up 22.3%, and First Trust Consumer Discretionary AlphaDEX (NYSEArca: FXD), up 21.8%. Leveraged plays have done well, too: ProShares Ultra Consumer Goods (NYSEArca: UGE) is up 23.1% in the last year.
Despite the bullish outlook, keep in mind that we’re working off some pretty depressed numbers, so any improvements look especially good. But thinking about consumer discretionary could give you the chance to get in early – possibly in time for a continued uptrend (but watch the 200-day for signals of strength or weakness).
Tisha Guerrero contributed to this article .
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.