{"id":8046,"date":"2024-08-17T00:03:02","date_gmt":"2024-08-17T00:03:02","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/08\/17\/will-xrt-retail-sink-or-soar-heres-what-the-charts-say\/"},"modified":"2024-08-17T00:03:02","modified_gmt":"2024-08-17T00:03:02","slug":"will-xrt-retail-sink-or-soar-heres-what-the-charts-say","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/08\/17\/will-xrt-retail-sink-or-soar-heres-what-the-charts-say\/","title":{"rendered":"Will XRT (Retail) Sink or Soar? Here\u2019s What the Charts Say"},"content":{"rendered":"
\n

Wall Street rallied\u00a0 Thursday morning as July retail sales jumped 1%\u2014triple what experts expected. Meanwhile, jobless claims dropped, and investors are still riding high on those cooler-than-expected inflation reports (CPI and PPI).<\/p>\n

Anticipating a possible Fed rate cut, investors now think that a recession may not be on the horizon.\u00a0If this means that more consumers are willing to open their wallets, then\u2026<\/p>\n

Is it now time to \u201cgo long\u201d retail?
\nHow does it compare to its sector (Consumer Discretionary) or the S&P 500?
\nRetail is seasonal, so what does that context tell us?<\/p>\n

Let\u2019s look at a weekly chart of the SPDR S&P Retail ETF (XRT)<\/a>, an industry proxy.<\/span><\/p>\n

XRT Macro View \u2013 Poised for a Big Move?<\/h2>\n

XRT\u2019s short-term moves may seem stuck in neutral, but zoom out, and you\u2019ll see a cautious, if not ambivalent, uptrend, sticking close to the rising 200-period simple moving average<\/a> (SMA) that stopped XRT\u2019s drop back in 2022. It\u2019s not quite screaming bullish, but neither is it waving any red flags.<\/span><\/p>\n<\/p>\n

CHART 1. WEEKLY CHART OF XRT. You need to zoom out to see that XRT\u2019s price actions outline a tame uptrend.<\/span><\/p>\n

The StockChartsTechnicalRank<\/a> (SCTR) tool is one way to gauge a stock\u2019s technical strength across multiple timeframes. XRT\u2019s SCTR performance? At 47, it\u2019s serving up some pretty \u201clukewarm\u201d vibes. <\/span>But the SCTR line is rising, and the question is whether XRT is poised for a breakout or a breakdown. Fortunately, you can be prepared for either scenario if you analyze the daily chart<\/a>.<\/span><\/p>\n<\/p>\n

CHART 2. DAILY CHART OF XRT. That\u2019s a wide rectangle.<\/span><\/p>\n

Thursday\u2019s gap opening<\/a> may seem like an isolated event, but in the context of the wide trading range, a wide <\/span>rectangle pattern<\/a> spanning $70 to $80, its impact looks muted. <\/span>Also, note that, according to the Chaikin Money Flow<\/a> (CMF), there\u2019s hardly any momentum backing the near-term spike, as selling pressure (see red box) has prevailed since April.<\/span><\/p>\n

XRT\u2019s relative performance<\/a> against the S&P 500 is -6%, meaning there\u2019s room for improvement, but only if economic conditions are conducive to retail\u2019s rise.<\/span><\/p>\n

XRT \u2013 Levels to Watch<\/h2>\n

For XRT\u2019s longer-term uptrend to resume, it has to break above resistance at the $79 or, to be safe, the $80 level.
\nFor this breakout to hold, the CMF must stay above zero, signaling that buying pressure has officially taken the lead over selling pressure.
\nIf XRT breaks below the bottom of the rectangle formation at $70, then look for support near $67, which marks the 2024 swing low and the July 2023 swing high.
\nIf XRT drops below $67, that\u2019s your cue to watch out for more downside. Time to hit pause and re-evaluate the fundamentals before planning your next move.<\/p>\n

What Does XRT\u2019s Seasonality Look Like?<\/h2>\n<\/p>\n

CHART 3. FIVE-YEAR SEASONALITY CHART OF XRT. Note September\u2019s negative higher-close rate.<\/span><\/p>\n

I\u2019m capping this seasonality chart<\/a> at five years to add more weight to the inflationary pressures that significantly affect the discretionary segment of the retail industry. As you can see, there\u2019s an almost-shocking zero higher close rate in September (numbers above the bar, but in September, there\u2019s no bar). It also happens to be XRT\u2019s worst performance, with a relative return of -6.3%.<\/span><\/p>\n

Yet despite inflation, XRT has shown outstanding performance in October and November with a 75% higher-close rate each month and a respective return of 3.1% and 9.4% (November being its strongest seasonal month in the last five years).<\/p>\n

At the Close<\/h2>\n

So, if XRT\u2019s seasonality profile holds true for September, will XRT dip below the current rectangle formation, or will it rise in the next few months to outperform in October and November? Either way, you\u2019ve got the key levels to keep an eye on moving forward.<\/p>\n

Disclaimer: <\/em><\/strong>This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Wall Street rallied\u00a0 Thursday morning as July retail sales jumped 1%\u2014triple what experts expected. Meanwhile, jobless claims dropped, and investors are still riding high on those cooler-than-expected inflation reports (CPI and PPI). Anticipating a possible Fed rate cut, investors now think that a recession may not be on the horizon.\u00a0If this means that more consumers […]<\/p>\n","protected":false},"author":0,"featured_media":8047,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-8046","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/8046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=8046"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/8046\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/8047"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=8046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=8046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=8046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}