The SPDR S&P Retail ETF (XRT) is surging to start 2019, but the exchange traded fund saw elevated options activity last Thursday following some disappointing holiday shopping sales updates.

Among those offenders was department store operator Macy’s Inc. (NYSE: M). On Thursday, that stock “plunged 17.7%, the biggest one-day drop since it went public 27 years ago. The stock was the biggest loser in the sector, and on the New York Stock Exchange, after the department store chain slashed its profit, sales, inventory and gross margin outlook, as holiday sales weakened in mid-December, and didn’t pick back up to expected patterns until the week of Christmas,” according to MarketWatch.

The spate of bankruptcies from brick-and-mortar retails stores could be spooking investors as companies like Sears Holdings filed for bankruptcy protection last month after 125 years in business. However, some data points could support an uptick in consumer spending. Additionally, the falling oil prices, which are expected to drag down gasoline prices, could also bolster sales as consumers are left with more discretionary money to spend.

Late last Thursday, “roughly 30,000 calls and 33,000 puts have changed hands on XRT — almost six times the expected intraday amount. Most active is the weekly 1/11 43-strike call, where it looks like new positions are being purchased for a volume-weighted average price of $0.53. If this is the case, breakeven for the call buyers at tomorrow’s close is $43.53 (strike plus premium paid),” reports Schaeffer’s Investment Research.

Strong Despite Challenges

While holiday shopping data is vital to XRT’s fortunes and those of other retail ETFs, XRT is performing admirably to start 2019. The ETF’s steadiness to start the new year has it closing in on its 50-day moving average while residing more than 15% above its 52-week low.

“Looking at the charts, XRT hit a 16-month low of $38.10 during the Christmas Eve sell-off, but has since climbed 13.2%. This rebound attempt stalled yesterday in the $44.00-$44.50 region — home to a 50% Fibonacci retracement of the fund’s plunge from early November through late December, as well as its 50-day moving average,” according to Schaeffer’s.

Investors have pulled $53.32 million from XRT since the start of 2019.

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