Exchange traded funds tracking retail stocks have been among this year’s most noticeably laggards. For example, the SPDR S&P Retail ETF (NYSEArca: XRT) is down 2.2%, a far cry from the better than 6% gained by the S&P 500.

Harsh winter weather was the most oft-cited reason for a spate of disappointing quarterly results that pressured scores of mid- and small-cap retailers, hampering XRT and rival retail ETFs in the process. However, XRT is higher by nearly 3% over the past month and the ETF could have more upside to come. [Investors Skirt Retail ETFs]

“For a good period of time this year we kept hearing the phrase…’Blame it on the weather,’  which was the excuse for soft retail sales. Even though the broad market isn’t up a ton in the first 5 months of the year retail has lagged,” said Chris Kimble of Kimble Charting Solutions.

XRT, an equal weight ETF, allocates 1% of its weight to discount retailer Family Dollar (NYSE: FDO). That stock recently surged after activist investor Carl Icahn disclosed a 9.4% stake in the company. On Monday, Family Dollar adopted a poison pill plan that triggers if one investor acquires a 10% or more of the company.

“Buyers have stepped into Dollar Tree (NasdaqGS: DLTR) after resistance was taken out. Carl Icahn seems to think Family Dollar is undervalued as he has announced this morning he has established a large stake in the company,” said Kimble. “If XRT breaks resistance of this small pennant pattern, odds increase it will bring in new buyers, similar to what took place in Dollar Tree.”

Dollar Tree also accounts for just over 1% of XRT.

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