Brick and Mortar Retail Sector (XRT) Has Its Own Virus To Deal With

Michele Schneider

As you will see when you check out the chart of the SPDR S&P Retail Sector ETF NYSEARCA: XRT it has had a virus since 2015.

Only once in 2018, did it look cured.

Since then, while the S&P 500 (SPY), NASDAQ 100 (QQQ) and the Dow Jones Industrials (DIA) went to make new all-time highs earlier this year, while the Retail Sector ETF (XRT) could not even clear the 2019 highs.

Now, there is a good argument that the brick and mortar retail sector has gone the way of the dinosaur.

Over the last several years, JC Penney, Macy’s, Toys R Us, Mattel, Pier One, to name a few, have either closed shop completely or diminished significantly in size.

Malls often resemble ghost towns these days. 

Online shopping has helped retail sales look way better than what we see in brick and mortar.

However, the metrics for measuring the gross domestic product weighs heavily on how brick and mortar does.

Since the peak in 2018, the Retail Sector (XRT) began trading on a one-way street going south.

xrt retail sector etf trading price sharp decline analysis chart february 25

On the weekly charts of the ETF Retail XRT, one could make a case for a multi-year double top.

What you see on the chart is a very large, multi-year channel.

I love channels, especially ones as clear and historic as this one.

What I love most about them is how many times you can buy the bottom and sell the top.

In this channel, one might have gotten long in 2018 above the channel breakout. But, the smart traders saw that the channel failure was an even better opportunity to go short near the top.

Right now, the price is in the middle of the channel. 

I bring this up today, a day when I saw so many “sages” on twitter tell people to buy the dip.

I became uncharacteristically vocal at how dangerous and irresponsible that is.

So keep your eyes on Retaile as one indicator. IF XRT continues down its one way street south, then a channel break at the bottom will look as disheveled as our Granny in the photo.

On July 12-13, 2020, I will be speaking/teaching at the Modern Traders Summit in Philadelphia. Only 5 speakers, which means attendees will get a lot of attention, I hope to meet many of you there – https://moderntraderssummit.com/2020-speakers/

S&P 500 (SPY) Confirmed warning phase – 320.74 is now key price resistance with 307.75 acting as price support.

Russell 2000 (IWM) Unconfirmed Distribution phase. Remember what that means? A distribution of equities into cash – 156.67 is super pivotal.

Dow (DIA) Unconfirmed distribution phase with 272.43 being pivotal price area.

Nasdaq (QQQ) Unconfirmed caution phase with 220.77 acting as pivotal price resistance.

KRE (Regional Banks) UGLY – remember this article? https://www.marketgauge.com/resources/mishs-daily/why-regional-banks-kre-is-the-prodigal-son/

SMH (Semiconductors) 136.96 the 4-week low is now pivotal price resistance. 128 is price support.

IYT (Transportation) 177.40 the 200—WMA. 

IBB (Biotechnology) 117.35 key pivotal area-if clears then could buy with stop under 116.48 looking for 120 area.

XRT (Retail) 43.00 pivotal price resistance.

Volatility Index (VXX) You know how many folks snarled when I wrote about the inverted doji hammers as a warning to the bulls?

Junk Bonds (JNK) Broke down, but if it can get back over 108.50 and hold, perhaps the worst is over for the time being.

Twitter: @marketminute

The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.   

NOT INVESTMENT ADVICE – PLEASE READ INVESTMENT DISCLAIMER.