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So go retail stocks, so goes the market?

People walk with their shopping bags along Lincoln Road Mall, December 24, 2013 in Miami.
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People walk with their shopping bags along Lincoln Road Mall, December 24, 2013 in Miami.

Consumer discretionary stocks helped lead the way for the stock market's strong gains last year, and now they may be poised to lead to the downside as well.

The sector had its worst week since August, down 1.9 percent, and now it's off more than 2.5 percent since the year began. In the past 12 months, it's been one of the best performers—still up 30 percent.

Bespoke Investment Group issued a note to clients this week specifically highlighting underperformance by retail stocks in that sector.

The underperformance of the S&P retail index begins to show when it is charted against the S&P 500, and the divergence between the two is what has traders worried.

Among the worst performers in retail stocks so far this year are Best Buy, Macy's and Bed Bath & Beyond.

(Read more: Why this retail IPO is an undeserving victim)

Looking at a longer-term chart, the analysts at Bespoke Investment Group plotted the ratio of retail stocks versus the broader S&P 500 over the past 20 years.

The ratio goes up when retail stocks are outperforming and down when they underperform.

(Read more: Earnings are the wild card for stocks)

Bespoke notes the retailers rolled over prior to the market corrections in 2000 and 2007.

The underperformance in the first chart only looks like a blip in a longer-term chart. So there hasn't been a complete turn yet, but still, it's one of the many tea leaves traders are trying to read as stocks sit near record market highs.

Retailer
Last
2014 YTD
% chg
Mkt Cap
BBY Best Buy 26.83 -32.72 13,000
GME GameStop 37.75 -23.37 4,282
BBBY Bed Bath & Beyond 67.15 -16.38 14,339
SPLS Staples 13.89 -12.59 9,459
NFLX Netflix 331.68 -9.91 19,578
LB L Brands 55.84 -9.72 16,485
PETM PetSmart 65.74 -9.64 6,792
KSS Kohl's 52.83 -6.91 11,491
TIF Tiffany & Co. 87.76 -5.41 11,325
KMX CarMax 44.66 -5.02 10,014
GPS The Gap, Inc. 37.15 -4.94 16,846
TGT Target Corporation 60.81 -3.89 38,911
ROST Ross Stores 72.08 -3.8 15,639
DLTR Dollar Tree 54.61 -3.21 11,485
AN AutoNation 48.23 -2.94 5,802
LOW Lowe's Companies 48.18 -2.76 50,503
JWN Nordstrom 60.11 -2.73 11,770
TJX The TJX Companies 62.13 -2.51 44,486
EXPE Expedia, Inc. 68.48 -1.69 9,049
HD Home Depot 81.26 -1.31 114,165
URBN Urban Outfitters 36.78 -0.86 5,470
AMZN Amazon.com 395.8 -0.75 181,203
FDO Family Dollar Stores 64.81 -0.25 7,425
DG Dollar General 60.57 0.41 19,596
GPC Genuine Parts 84.6 1.69 12,900
TRIP TripAdvisor 84.76 2.33 11,982
AZO AutoZone 495.47 3.67 16,689
M Macy's 56.03 4.93 20,561
Source: CNBC

—By CNBC's Dominic Chu and Elizabeth Schulze. Follow them on Twitter @thedomino and @eschulze9.


Retailer
Last
2014 YTD
% chg
Mkt Cap
BBY Best Buy 26.83 -32.72 13,000
GME GameStop 37.75 -23.37 4,282
BBBY Bed Bath & Beyond 67.15 -16.38 14,339
SPLS Staples 13.89 -12.59 9,459
NFLX Netflix 331.68 -9.91 19,578
LB L Brands 55.84 -9.72 16,485
PETM PetSmart 65.74 -9.64 6,792
KSS Kohl's 52.83 -6.91 11,491
TIF Tiffany & Co. 87.76 -5.41 11,325
KMX CarMax 44.66 -5.02 10,014
GPS The Gap, Inc. 37.15 -4.94 16,846
TGT Target Corporation 60.81 -3.89 38,911
ROST Ross Stores 72.08 -3.8 15,639
DLTR Dollar Tree 54.61 -3.21 11,485
AN AutoNation 48.23 -2.94 5,802
LOW Lowe's Companies 48.18 -2.76 50,503
JWN Nordstrom 60.11 -2.73 11,770
TJX The TJX Companies 62.13 -2.51 44,486
EXPE Expedia, Inc. 68.48 -1.69 9,049
HD Home Depot 81.26 -1.31 114,165
URBN Urban Outfitters 36.78 -0.86 5,470
AMZN Amazon.com 395.8 -0.75 181,203
FDO Family Dollar Stores 64.81 -0.25 7,425
DG Dollar General 60.57 0.41 19,596
GPC Genuine Parts 84.6 1.69 12,900
TRIP TripAdvisor 84.76 2.33 11,982
AZO AutoZone 495.47 3.67 16,689
M Macy's 56.03 4.93 20,561
Source: CNBC


  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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