EarningsBeats.com Digest

Published: Fri, 05/22/20

EarningsBeats.com Digest for May 22, 2020

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Apparel Retail Breaks Out, But Focus On Relative Strength In The Group

L Brands (LB) reported quarterly earnings results and led a very strong apparel retail group ($DJUSRA) on Thursday. The DJUSRA was easily the best industry group and it belongs to consumer discretionary (XLY), which has been on relative fire and is only further buoyed by groups like the DJUSRA. But rather than chase a one day wonder like LB, my preference would be to stick with a leader in the group like Burlington Stores, Inc. (BURL):

BURL has been a strong performer in retail apparel for well over a year. Seeing the entire group breaking out suggests that now would be the time to consider BURL as it also broke out. But again, it's the relative strength component that I believe is very important here. LB gained 18% on Thursday, but it has yet to clear its April high nor negotiate gap resistance created by the heavy volume gap down in mid-March. From this point forward, I'd feel more comfortable with BURL and watch LB.

Happy trading!

Tom Bowley

Chief Market Strategist

EarningsBeats.com
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