XRT and RTH Charts Rising Wedge Negative Divergence
This is the eve of the Retail Sales data which hits tomorrow morning at 8:30 AM EST 3/13/12.
XRT Chart: The same analysis for RTH applies to XRT. XRT represents more of the mall type stocks while the RTH represents more of the big box stores such as WMT. Projection is the same as the RTH, spank down on tap, and potential M top roll over follows. The importance of the Retail Sales data 8:30 AM tomorrow morning cannot be understated.
RTH Chart: Keystone remains negative on the retail sector this year but that does not stop the price from climbing. The rising blue wedges and negative divergence (red lines) should spank price down. Tomorrow we receive the Retail Sales data which may be a watershed event for markets. In May 2006, markets experienced a sharp sell off which was initiated by weak retail sales data.
The RSI and MACD line will want to see matching highs after a spank down occurs, so an M top would be a candidate moving forward. Note the severe drop off in volume as time moves along, price now moving up on vapor. Interestingly, the RTH received a stock split 3 for 1 in mid-February, this allows Ma and Pa, and Joe and Jane Sucka to enter the retail sector, as they lap up the daily media hype, and serve as the bag holders. The stock split made RTH more available to Ma and Pa at a cheaper price so the retail trader moved into retail stocks. The high gasoline price has to make an impact on retail sales as well. At 8:30 AM, with the Retail Sales data, we find out if they are the bag holders, or not. The chart shows a significant top forming for retail sector and roll over would be expected as the weeks play out.
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