This type of a “trade down” might be different than all of the brilliant moves Red Auerbach (picture, above) pulled some fifty years ago in the early NBA to enable the Boston Celtics to win eight titles in a row, and eleven in thirteen years.
However, with the weakness in the restaurants, homebuilders, and many housing-related stocks of late, the dollar stores may very well catch another bid here with a trade down in the consumer developing.
With that in mind, the first two charts, DLTR FDO, I like as long ideas on further strength out of those bullish consolidations within uptrends.
And the other component of the trade down play may be that housing-related retailers which had seen great rallies, like Restoration Hardware, may be in store for a deeper pullback. As such, I would look at RH, third chart below, as a short idea down to the $60 gap-fill on weakness, especially below that 50-day moving average.
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YUM another consumer trade down hiding spot?
one to watch with China