Guest Post: Retail Stocks About To Breakout?
By, Adam Sarhan
Contributor
On Thursday the tech heavy Nasdaq 100 broke out of its year long range and hit a fresh 15-year high as we enter the heart of earnings season. This very strong action is typically bullish for the broader market and leading stocks. Three of the market’s leading groups right now include: Financials, technology, and the very strong biotech group. Underneath the surface, we always like to look for new emerging groups that are on the verge of breaking out. In that vein, the retail group remains perched below resistance of a new and bullish 5-month flat base. The $XRT is a popular exchange traded fund that tracks the retail group and serves as a good proxy for investors who want exposure to retail stocks.
On Tuesday, we saw retail sales contract by -0.3% and miss estimates for a gain of +0.3%. So, how can retail stocks rally if retail sales missed estimates you may be asking yourself? The answer is simple: the market is a forward looking mechanism and “data” (economic and earnings data), by definition, is a rear-review mirror phenomenon. It is important to note that we are still in a very strong bull market for stocks which means the path of least resistance is higher…for now.
Here are a few other retail stocks that are on our radar for your review:
I see all these stocks climbing but on lower volume which says the institutions are not participating in the climb. Is it possible that they are not as excited about this industry as the average investor. Or did I misread these charts?