As of Monday, the strongest sector within Mish's Economic Modern Family is the Retail space (XRT). Though we will look at other key sectors in the Family, XRT is of special interest with the upcoming holiday season.
Struggling from limited employees, companies are feverishly attempting to keep an inflow of fresh stock through the end of the year. So far, retail companies have begun to delay large surges of buying, with pre-Black Friday sales as buyers are enticed to shop early before the main holiday rush. The only problem is that, without an excess amount of goods, especially in the tech sector, sales are likely not to match buyers' expectations.
On the other hand, while we can speculate potential supply bottlenecks all we want, the price of XRT is holding near highs and, if it continues to do so, will prove that companies, though stressed, are managing better than expected.
Breaking the retail space down technically, XRT has support from last week's low at $99.80. Moving forward, we should watch for XRT to hold this price level and, ideally, hold over last week's high of $102.84 if the momentum continues to the upside.
Though the retail space is holding near highs, other key sectors including the Semiconductors (SMH), and Transportation (IYT) are not far behind. Both are supporting sectors for XRT and, thus, each has similar support levels from last week's low on Wednesday 11/10. As seen in the above charts, the support levels are $291.55 for SMH and $275.11 for IYT. (Black lines) Nonetheless, keep these support levels in mind as we look for any indications of weakness the closer we get towards the holiday shopping season.
In general, we should watch XRT, IYT, and SMH to hold the same support area. Furthermore, if IYT or SMH begins to break down, this could be a negative sign for XRT.
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ETF Summary
- S&P 500 (SPY): 467.38 support.
- Russell 2000 (IWM): 236.31 support.
- Dow (DIA): 359.38 support.
- Nasdaq (QQQ): 387.53 support.
- KRE (Regional Banks): 72.90 support area.
- SMH (Semiconductors): 291.55 support.
- IYT (Transportation): 275.11 minor support.
- IBB (Biotechnology): Holding general support area. Needs to get back over 154.48.
- XRT (Retail): 99.80 support.
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
