Joined Mar 24, 2016
17 Blog Posts

Retail can not get out of it’s own way!

One sector that keeps catching my eye as a risk is retail, which technically remains a complete and utter disaster.

A quick look at the daily chart and we find a choppy down trend, with 3 lower highs low that 47 level.

The biggest problem I have here is that this sector really has not participated in much of the rally to all time highs, but rather just been choppy and appears to be forming a major top on the Weekly chart. In order for me to really feel otherwise, we must see a HigherLow and a move up and hold above 47, but until that happens this is a sector I personally am staying away from or looking for shorts within.

As we drill in most of the names in the sector are giving the same message. Down Trend.
Take Netflix for example.  While it has been able to hold the 85 level, it is continually setting lower highs. That needs to change in order for me to think it could possibly be a long idea for anything more than a potential day trade.

This topping theme is prevalent in many places within the sector, which is something I don’t want to be a part of on the long side. While there are a few names that look healthier, these types of setups, like the one below are quite dominant, which tells me to stay away.

If you are one that loves to short, this sector smells like a place to be doing some hunting. I would very likely consider this thesis wrong when 47 area becomes support rather than resistance, but to this point there is no evidence of that happening. Take a walk through the retail sector names and tell me what you think.

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One comment

  1. Heckler

    Great I’m long NFLX and UA… 🙁

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