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Equity indexes tacked on minor gains as back-and-forth trading prevailed throughout most of Thursday. Investors on Wall Street shrugged off worse-than-expected jobless claims data on the home front as encouraging debt auction news from overseas stole the spotlight. Euro zone woes cooled off as investors rejoiced over the successful bond auction of Spanish and Italian debt, perhaps signaling that the currency bloc is slowly inching closer and closer to financial equilibrium [see ETFs To Play AAA Europe].

Bullish momentum has been abundant on Wall Street in the first weeks of 2012 as investors have started off the year on a positive note. Investors will look to sustain the euphoria as the spotlight turns to the latest University of Michigan Consumer Sentiment Index. The State Street SPDR S&P Retail ETF (XRT) will make its way across our radar screen later today as investors digest the latest consumer confidence figure, which is expected to come in at 71.5, versus the previous reading of 69.9.

Chart Analysis

The U.S. retail sector demonstrated tremendous resilience in the final quarter of 2011 as this corner of the domestic equity market charged ahead, bolstered by positive fundamental data, while the majority of other asset classes were plagued with uncertainty and choppy trading. XRT managed to quickly get back on its feet so to speak, after falling off from its high at $56.44 a share following the downgrade of U.S. credit quality by Standard & Poor’s in early August of last year [see XRT Holdings]. This ETF appears to have established a triple bottom near the $44 mark, seeing as how it held support at this level on 8/9, 8/19, and 10/4/2011.

Click to Enlarge

From a technical perspective, this ETF appears poised to continue its trek higher given its rising levels of support and the fact that it has closed consistently above its 200-day moving average (yellow line) since December 20th, 2011 [see XRT Returns].

Outlook

If consumer confidence comes in better-than-expected, investors will likely increase their risk-appetite and jump into equities. In terms of upside, XRT may jump up to $54 a share, although short-term traders should be cautious as this ETF has significant resistance around this price level [see Shopping For A Retail ETF]. On the other hand, selling pressures could prevail if the latest confidence report paints a gloomier-than-expected outlook for the U.S. economy. In terms of downside, this ETF has minor support around the $52 mark, while investors should note that major support lies closer to the $50 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

Disclosure: No positions at time of writing.

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Source: Friday's ETF Chart To Watch: SPDR S&P Retail ETF