Tuesday, May 19, 2009

Retail Retracement

The Retail industry exhibited relative weakness during last week's sell off, as it dropped all the way to it's 50 day moving average. Had you been bearish on retail stocks, that obviously would have worked out rather well. With the strength we've seen so far this week, the RTH (Retail Holdrs) has staged a nice little retracement back up to prior support (on lower than average volume). For those of you who believe the retail space will continue to weaken going forward this retracement can be looked at as an opportunity to reload on bearish trades.
From a broader perspective the whole consumer discretionary sector (XLY) didn't do so hot last week. So in addition to retail stocks, restaurants also got hammered and are in the midst of a retracement. It may not be a bad idea to take a peek at some restaurant charts for bearish retracement patterns as well (CMG, DRI, CBRL). I'd like to see the market soften up a bit more this week before I get too trigger happy with bearish trades, but I'll be keeping retail & restaurants on the radar.


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