Stocks managed to end up in green territory despite chugging along sideways throughout most of the trading session yesterday. Low volumes remain a dominant theme this week as many investors are staying off to the sidelines in anticipation of Ben Bernanke’s speech on Friday. Before his appearance at Jackson Hole, the Fed Chairman will surely consider today’s Beige Book release; according to the report, the U.S. economy continued its slow and steady recovery, although weak manufacturing activity was also cited. In light of this release, the latest U.S. GDP revision came in at 1.7%, topping the previous reading of 1.5% and helping to improve investors’ confidence [see also 5 World Players Buying Gold Now].
The economic data continues to pour onto Wall Street and investors will digest personal income and consumer spending data later today. As such, our ETF to watch for the day is the State Street SPDR S&P Retail ETF (XRT, A-), which could experience volatile trading as markets react to the latest insights regarding the health of the U.S. consumer. Analysts are expecting for personal income to decline to 0.3% from 0.5% previously, while consumer spending is expected to pop to 0.4% after coming in flat last month [see also Consumer-Centric ETFdb Portfolio].Chart Analysis
XRT has managed to bounce off the $60 level last week and appears to be well on its way to retesting its previous highs near $62.50 a share. This ETF has been steadily climbing higher within a fairly tight trading-range since correcting lower to its 200-day moving average (yellow line) in June after topping out at $63.04 a share on March 27, 2012. XRT has a clear path ahead of its itself, although profit-taking pressures could strike as it nears the $62.50 mark [see also 5 Important ETF Lessons In Pictures].xrt
XRT will have to clear a major hurdle over the next few days here if bullish momentum is to remain strong; notice how this ETF has previously tried, and failed, to establish support above $63 a share back on March 27 and later again on April 30, 2012 [see also 3 ETF Trading Tips You Are Missing].Outlook
If the latest income and spending reports paint a bullish outlook for the health of the U.S. consumer, retail stocks could stage a rally on the day; in terms of upside, the next resistance level for XRT comes in at around $62.50 a share. On the other hand, a bearish reaction could knock XRT lower; in terms of downside, the first minor support level for this ETF comes in at around $60.50 a share followed by the $59 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.
Follow me on Twitter @SBojinov
Disclosure: No positions at time of writing.