By Doug Busch
With recession chatter still buzzing, the consumer discretionary sector has taken its share of hits. Heading into December, the Consumer Discretionary Select Sector SPDR Fund is just the ninth-best performer among the 11 major S&P groups. The ETF is up 6% year to date, edging out just real estate and consumer staples. Much of that lag can be tied to its two heavyweight components, Amazon and Tesla, which trade 10% and 12% below their respective 52-week highs.
Beneath the surface, a healthier trend may be emerging. The more diversified State Street SPDR S&P Retail ETF -- whose largest holding is less than 3% of assets -- is beginning to outshine its sector counterpart. The XRT has gained 5% over the past month compared with only a 1% gain for the consumer discretionary ETF. That divergence suggests strength is widening across the retail landscape, and that the latest rally may have legs.
Momentum accelerated last week as the XRT surged 5.5%, its second-best weekly advance since its lows in early April lows. This rally pushed the ETF toward a potential double-bottom breakout near $86.31. Major moves from its five largest holdings are helping fuel the shift, with Victoria's Secret more than doubling off its summer lows, Kohl's exploding 56% last week (not a typo), and Macy's logging a double-digit gain last week as well.
With breadth improving and price action strengthening, several retail names look poised for a year-end run. Here are three candidates that stand out.
Marriott International Inc.'s price action speaks loudly to the argument that a recession may not be on the table. The hotel chain printed a new all-time closing high in Black Friday's holiday-shortened session. It gained 17% in November, its best monthly gain since February 2021, powered by continued strength in consumer spending on experience-driven activities. The stock is getting increasingly comfortable above the key $300 level. Peers Hilton Worldwide and Hyatt Hotels are acting firm as well, an encouraging sign.
Technically, Marriott's stock has been impressive ever since completing a bullish island reversal on April 23, with a 4.2% gap higher. Bulls now want to see continued strength above the $300 area, where the stock has logged three straight closes, a dynamic similar to early February. The name broke above a cup-base pivot at $283.85 on Nov. 7, before clearing a bull flag pivot at $290 late last week.
From here, the technicals support a move toward $320 by year end, about 5% above current levels. By the end of 2026, a rally of 33% to $405 looks feasible. I remain bullish above $285.
Marriott was trading around $304 Monday.
On Holding, the Swiss footwear company, is having a rough 2025, down 20%. The stock currently sits 31% below its recent 52-week high, but it has rallied back to the top of the weekly range from three weeks ago, when it exploded 21% on its strongest weekly volume since the IPO in 2021.
Technically, the setup is improving. The stock has carved out a bull flag that began forming near $35, which doubled as a retest of the April lows before the stock sprinted toward $60 in just 10 weeks. That sharp advance stalled in late May with back-to-back doji candles followed by a bearish dark cloud cover candle.
Now the stock looks ready to try again. A move toward $60, about 35% above current levels, appears achievable by March -- especially as it holds comfortably above both its 50-day simple moving average and 21-day exponential moving average for the first time since July. I remain constructive above $41.
On Holding was trading around $44.50 Monday.
Finally, Lululemon Athletica is a name I haven't favored for quite some time. The stock remains 66% below its all-time closing high from Dec. 29, 2023. That's even after last week's nearly 10% surge, its second-best weekly advance in the past year. As I often say, there's rarely a reason to buy a falling knife until a clear technical catalyst appears, and we finally saw one late last week with a break above a bearish descending triangle. That pattern began forming around the key $200 level after the stock logged its third straight double-digit earnings-related loss on Sept. 5.
Technically, last week the stock reclaimed both its 50-day simple moving average and 21-day exponential moving average, with the former now sloping higher for the first time since February. Support has repeatedly held just above $160 since September, forming a constructive floor.
I believe the stock could reach $220, about 20% above current levels, by February. Remain bullish above $173.
Lululemon was trading around $184 Monday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 01, 2025 10:57 ET (15:57 GMT)
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