A counter-trend signal in this retail ETF has been triggered. What the charts show ahead of Black Friday

Retail ETF Shows Unusual Signal Before Black Friday, Offering Investors Potential Insight on Holiday Sales

Think of the retail sector like a big department store after Thanksgiving—some shelves are messy, some are empty, but if you look closely, there might be some hidden bargains. That’s why paying attention to retail stocks right now could matter for your investments.

Why Retail Stocks Matter for Investors

Every year, holiday shopping drives a huge chunk of business for retailers. This busy season can move stock prices, especially for companies like Amazon and Walmart. If you invest in the market, what happens in retail can impact your portfolio, the S&P 500, and even your retirement accounts.

The Bearish Side: Recent Struggles in Retail

  • The S&P Retail ETF (XRT) fell 13.6% from its September high, showing that investors have been worried about retail earnings.
  • Many people are feeling negative about retail stocks, which can push prices down even more in the short term.
  • Amazon (AMZN) lost momentum after its earnings jump, and technical signals suggest it could keep falling for now.
  • When people shift their money from growth stocks (like Amazon) to value stocks, it can leave some big names out in the cold.

The Bullish Side: Signs of a Possible Comeback

  • Oversold signals are showing up for XRT, meaning the stocks might have fallen too far, too fast. Historically, these setups can lead to rebounds. According to Nasdaq, oversold conditions have often led to short-term gains in the past.
  • Walmart (WMT) is showing improving momentum and hasn’t reached an overbought level yet, which could mean more room for growth.
  • Technical tools like the DeMARK Indicators and moving averages suggest that the retail sector could stabilize or even rally if holiday shopping is strong.
  • Walmart’s long-term trend looks healthy, with the potential for new all-time highs if things go well.
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Key Levels and What to Watch

  • XRT has support near $78 (200-day moving average) and resistance at $84 (50-day moving average). A move above $84 could signal a bigger recovery.
  • Walmart’s next big test is the $110 level, which could lead to new highs if it breaks through.
  • Amazon may stay in a “cooling off” phase, so it might not lead the pack this season.

Extra Context: How Big Is Holiday Shopping?

Holiday sales are a big deal. In 2023, U.S. holiday retail sales were expected to top $960 billion, according to the National Retail Federation. That’s about 20% of annual retail sales, showing just how important this season is for the sector and investors alike.

Investor Takeaway

  • Watch for rebounds: Oversold signals in retail could mean bargains for patient investors, especially if holiday sales are strong.
  • Stick with leaders: Walmart looks healthier than Amazon in the short term, thanks to improving technical signals and a solid long-term trend.
  • Be cautious with Amazon: The stock may need more time to recover, so don’t rush in expecting quick gains.
  • Track key levels: Pay attention to support and resistance zones for XRT and Walmart—they can be clues for bigger moves.
  • Balance your bets: Consider mixing retail stocks with other sectors to avoid getting caught by sudden swings in holiday spending.

For the full original report, see CNBC

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