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Monday, June 25, 2012

Retail sector RTH ETF

Retail has been a very strong sector since last fall.  The retail ETF RTH is getting into an interesting position here.  Check out the weekly chart.

We clearly broke the uptrend line from the low last fall.  The overall trend is neutral as a result.  The 6 SMA has crossed below the 18 SMA, but price is back above the 18 SMA at this time.  I am not sure what is up with the volume on this ETF.  I looked at two completely different data feeds and it is showing the same thing.  There was a huge drop off on the charts.  This makes it rough for you guys to see.  Since the top there are two big red volume bars and one big green bar.  Both the red bars had higher volume then the green bar.  So there has been a little bit of distribution in this sideways formation but nothing conclusive.  There is a possible triple top in the making here.  A close back below the 6 SMA (41.10) would likely target a move down to first key support at 39.74.  If that were to break, it should target a move down to the second key support level around 38.  That was the area of pretty stiff resistance on the way up and should provide solid support now.  Another weekly thrust up could resume a move to the upside to at least test the prior high if not keep going.

In perusing some of the charts that make up this ETF I noticed a couple of interesting things.  Check out the Home Depot and Lowes charts.

These stocks in the same business moved up and down together very well until lately.  What is up with that?
It looks like anybody owning HD might want to keep a close eye on it.

I came across another interesting chart.  Check out the monthly chart of Walmart.

WMT went sideways through the middle part of the last decade then started spiking up in late 2007 as the U.S. was going into recession.  It then proceeded to trade sideways until late last year and spiked up again.  With the data showing the possibility of another recession is this a coincidence or a warning?  When things get tight it is not hard to imagine some people that usually shop in more upscale stores going into Walmart.  I guess time will tell.


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