The holiday shopping season is over, but some retail stocks and exchange traded funds are surging to start 2019. For example, the SPDR S&P Retail ETF (XRT) is up nearly 7% to start the new year and some technical analysts see encouraging signs on the charts of some retailers.
Strength in XRT could be a sign some brick-and-mortar retailers are weathering competition from online rivals. The drop in brick-and-mortar sales last year wasn’t a steep drop-off from 2017 as consumers still use physical stores to purchase items they know are in stock or want to view an item prior to purchasing it online for a better price.
“Craig Johnson, chief market technician at Piper Jaffray, believes that the retail move is ‘a bounce that we can trust’ and thinks that the retail-tracking ETF (XRT) could actually return to a key level in the charts,” reports CNBC.
While XRT remains more than 17% below its 52-week, the equal-weight retail ETF is 15% above its 52-week low. The fund is also just 2% below its 50-day moving average, indicating it could just be a matter of days before XRT reclaims that line,
Important Levels
“The XRT’s 200-day moving average currently sits at around $47.53. This means Johnson believes a 9 percent rally is possible, which would take retail back to mid-November levels,” according to CNBC.
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.
“Gina Sanchez, CEO of Chantico Global, believes that ‘the consumer is healthy here,’ which is positive for retail. However, Sanchez also warns that there are a number of underlying factors that could still hit the group,” reports CNBC.
Investors pulled almost $19 million from XRT last year.
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