Last Thursday, the retail sector ETF (XRT) opened near its 50-day moving average. It closed with a large range on increased volume, which was a good sign of strength. Though it has not made a decent-sized move since then, it has been holding its current price level.
Another factor is the transportation sector (IYT), which made another new all-time high Tuesday. IYT's strength helps the retail sector because, if the movement of goods is steady or growing and travel starts to pick up, this will in turn support the retail space.
One company that pairs with the pullback in XRT is Macy's (M).
M has done some consolidation around the 50-DMA at $15.80. Additionally, its recent low of $14.76 is not far away from the current price, which makes for a good risk-reward setup. If it can hold the current range and confirm a move upwards on increased volume, M could have upside potential back to the $20-21 area.
However, one thing to be wary of is finicky price action found in the Nasdaq 100 (QQQ) and Russell 2000 (IWM), which are both sitting under their 50-DMA. If they can clear their 50-DMAs, this would offer a boost to retail and the overall market. But if not, stay cautious, as a choppy market is one of the hardest markets to trade.
- S&P 500 (SPY): Support 386.87. 398.12 resistance
- Russell 2000 (IWM): Still watching to clear the 50-DMA at 220.68
- Dow (DIA): 332.86 high to clear
- Nasdaq (QQQ): Needs to stay over 309, 321 resistance to clear
- KRE (Regional Banks): Support 63.44 the 50-DMA
- SMH (Semiconductors): Needs to clear and hold over 241 area
- IYT (Transportation): New all-time highs
- IBB (Biotechnology): Main support the 200-DMA at 144.96
- XRT (Retail): Cleared 88.59 the 10-DMA
Assistant Director of Trading Research and Education