The sector to start the current rally off the lows in February was Retail! It is fitting now, with the S&P 500 index, on the verge of breaking through the January high the same sector would announce data to make or break the move. The forecast has been lowered based on auto sales from the import data to 0% growth. A good number would be the potential springboard higher and a bad number could spell pullback. An in line number would be the perfect finish to the week of making it five boring trading days in a row!
The chart below is XRT, SPDRs Retail ETF. As you can see we have been tracking this for some time now as the trading range was well established since October. The break from this range was bullish and the move higher has been well defined. Earnings have been the catalyst for the breakout along with guidance looking forward for more growth in the second quarter.
We have hit our target on this play, but it looks ready to move higher. Today’s data could provide that catalyst to the upside. However, a bad number could trigger the stop currently at $39.15. My view is for more upside as the retail earnings continue to impress. The specialty retailers this week have continued the string of good news and upside for the sector.
Watch and plan. Set your stops according to your risk tolerance and look for opportunities to add to this play on a pullback or establish a new position. Be disciplined and define your entry, stop and target before risking your money.
Disclosure: Entered and hit target looking for move higher