Betting on the Consumer in 2017

The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY), the largest exchange traded fund tracking consumer discretionary equities, is higher by about 8% this year, good for a mediocre showing among the sector SPDR ETFs.

The holiday shopping season has been vexing for retailers and some discretionary names.

Consumer spending has been muted this holiday season. According to First Data, retail spending is up 2%, or slightly slower than the 2.4% gain at this time last year, as online spending outpaces buying in physical stores from October 29 through December 12, reports Anne D’Innocenzio for the Associated Press. In contrast, online sales growth was up 9%.

However, some market observers believe the discretionary sector is poised for better things in 2017.

XLY’s “price has been trading within a steady uptrend since early 2015 and the momentum has started to accelerate in recent months. Strong Black Friday, Cyber Monday and holiday spending reports suggest that the bulls have lots to cheer about and based on technical analysis the recent close above the dotted trendline suggests that momentum could continue for the first few months of 2017,” according to Investopedia.