Brick-and-Mortar, Retail Sector ETF Shows Surprising Strength
This article was originally published on ETFTrends.com.
While most of market's attention has been focused on up-and-coming online retailers in a digital age, the traditional retail segment and sector-related ETFs have enjoyed a strong year.
The SPDR S&P Retail ETF (XRT) gained 11.7% year-to-date and has reached record highs, outperforming the 7.3% rise in the S&P 500, as brick-and-mortar retailers like Costco, Nordstrom, DJX, Ross Stores and Five Below pushed toward 52-week highs.
“It looks like we have a double bottom here that’s set up this push, and it looks like if the broader market does stabilize, XRT could punch up through $50,” Todd Gordon, founder of TradingAnalysis.com, told CNBC. “It looks like the recovery is in motion.”
XRT Catching Back Up to Amazon?
XRT has already punched above the $50 level, hitting new all-time highs, but remains stuck within range over the past few weeks.
Gordon also pointed out that the XRT formed a "double bottom" after touching a multiyear low just under $38 in early 2016 and again last August. A so-called double bottom pattern typically indicates a technical level of support for chart watchers.
However, the road to its current success has been filled with hurdles.
“For a long time it looked like Amazon was going to get the leg up on retail and really put them out of their misery,” Gordon said.
In previous years, a strengthening Amazon and rising optimism over the outlook for e-commerce trouncing the traditional brick-and-mortar space have weighed on the traditional retail sector and related ETFs. For instance, from the beginning of 2014 through the end of 2016, Amazon (AMZN) surged 88% higher, whereas the XRT ETF was flat.
“All of a sudden we’re starting to get a bit of a closure of that gap here,” Gordon added. “XRT is catching back up to Amazon.”
For more information on the consumer sector, visit our consumer discretionary category.
POPULAR ARTICLES FROM ETFTRENDS.COM
