As of Monday, the strongest sector of Mish’s modern economic family has been retail space (XRT).
While we’re looking at other key areas of the family, XRT is of particular interest with the upcoming holiday season.
Struggling limited liability companies, companies are feverishly trying to maintain an influx of fresh inventory through the end of the year.
So far, retail businesses have begun delaying strong buying spurts with pre-Black Friday sales as shoppers are pressured to shop early before the main holiday rush.
The only problem is that without an excessive amount of merchandise, especially in the tech sector, sales may not match buyer expectations.
On the other hand, we can speculate on potential supply bottlenecks all we want, however, XRT price is holding near the highs and if it continues to do so, it will prove that the companies, although stressed, are doing better than expected.
Breaking down the retail space technically, XRT is enjoying support from last week’s low at $99.80.
Going forward, we should ensure that XRT maintains this price level and ideally above last week’s high of $102.84 if the momentum continues to the upside.
Although the retail space remains at all-time highs, other key sectors including semiconductors (SMH) and transportation (IYT) are not far behind.
Both are support areas for XRT and therefore each have similar levels of support from last week’s low on Wednesday 10/11.
As shown in the charts above, the support levels are $291.55 for SMH and $275.11 for IYT. (Black lines)
Nonetheless, keep these support levels in mind as we look for any signs of weakness as we inch closer to the holiday shopping season.
In general, we should watch XRT, IYT and SMH to keep the same support zone.
Also, if IYT or SMH starts to break down, this could be a negative sign for XRT.
Analysis and summary of ETF trading:
S&P 500 (SPY) 467.38 support.
Russell 2000 (IWM) 236.31 support.
Dow (DIA) Support for 359.38.
Nasdaq (QQQ) 387.53 support.
KRE (Regional banks) 72.90 support area.
SMH (Semiconductors) Support for 291.55.
IYT (Transportation) 275.11 minor support.
IBB (Biotechnology) Hold the general support area. Must return above 154.48.
XRT (retail) Support at 99.80.
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