rounded corner
rounded corner
top border

Retail Industry Index Providing The Next Long


Bookmark and Share

Retail Industry Index Providing The Next Long

The S&PRetail IndustryIndex comprises stocks in the S&P Total Market Index that are classified in the GICS retail sub-industry. For this article well be usingThe SPDR S&P Retail ETF (XRT) which tracks an equal-weighted index of stocks in the US retail industryandcorrespond generally to the total return performance of the S&PRetail Select IndustryIndex.

The performance of XRT is significantly correlated to the prevailing level of consumer confidence in the economy because the ETFrepresentthe companies whose main business is selling retail merchandise to consumers like WalMart , Groupon, American Eagle, ect.

XRT Sectors and Holdings

XRT Sectors and Holdings

To understand the current situation for the Index we need to take a look at the bigger picture since the recent recession after the 2008 Crash :

Retail Industry Index ETF XRT Weekly Chart

Retail Industry Index XRT Weekly 11.23.2017

The ETF Rallied strongly from its 2008 low showing an impulsive 5 waves advancethat ended at 2015 pea. Since then, the Index started wasnt able to rally to new highs similar tothe majority of sectors in the stock market.

XRT currently is still correcting the cycle from 2008 low and looking to do a double three structure toward 100% 123.6% Fibonacci extension area 34 31 where it can find buyers for a move to new highs or at least 3 waves bounce.

How can we use the weakness in the retail index to our favor ?

The world financial market is all correlated together and every instrument is related to each other in different dimension.In our next chart we can see how XRT and RUSSEL Index are sharing the same 2016 low which was a buying opportunity around the market as the majority of Indexes rallied to new highs from.

The rally around the world is still in progress almost for 2 years now while theretail industry index remained in a sideways range during that time. As the instrument has a corrective structuretaking placethen we can usethe extreme areato know wherethe next buying opportunity will take place.

Russel (RUT) VS Retail Industry Index (XRT)

XRT vs RUT

The rally in the stock market is far from ending but correction do take place, that why we use different tools like distribution system , pivots , cycles and correlation to help us identify the right time to switch and look for the next opportunity.

Some ofclearestinstruments that guide investorsaround the market in these conditions is the clear structure in Apple (AAPL) and NASDAQ (NQ_F)as both areleading the move to the upside. However as the market is bullish its always the wrong call to call a top against the trend as extension can always accrue in the strongest instruments, therefore its better to use a weak element in the market like XRT to identify where the bounce can fail and combined with the rest of tools to get a perfect match.

Retail Industry Index ETF XRT Weekly Chart

Retail Industry Index XRT Daily 11.23.2017

The retail industry ETF XRT is currently showing an incomplete 5 swings bearish sequence from 2015, which is part of 7 swings corrective structureand consequently we expect the ETF to keep fail lower as long as the pivot at December 20016 peak (48.3)is holding.

The current 3 waves bounce in XRT is looking to reach extreme area 42.95 45.59 where we expect sellers to appear, therefore around that area the stock market would find a short term peak and start at least a 3 waves correction to the downside.

Recap

The majority of retail traders are trying toTime the Peak in Stock Marketto get in short side while the big players are looking for the nextpullback to take place so they can add more Longs. Using an ETF like XRT to trade to short side and hedge your portfolio duringmarket correction is a far better trade then trying to short Apple or Nasdaq.


If youre interested in getting more insights about buying opportunities in theStock Market then takethis opportunity andtry our services14 daysto learn how to trade Stocks and ETFs using our blue boxes and the 3, 7or 11 swings sequence.You will get access to our 78instruments updated in 4different time frames, Live Trading & Analysis Session done by our Expert Analysts every day, 24-hour chat room support and much more.



Recent articles from this author



About the author


Elliottwave-Forecast.com  (by EME PROCESSING AND CONSULTING LLC) was founded in 2005 by Eric Morera. Since inception our company has provided tailored Financial Market Services to thousands of clients.

ElliottWave-Forecast has built a reputation on accurate technical analysis and a winning attitude. By successfully incorporating the Elliott Wave Theory with Market Correlation, cycles, proprietary pivot system, we provide precise forecasts with up-to-date analysis for 42 instruments including FX majors, Gold, Silver, Copper, Oil, TNX and major Equity Indices. Our clients also have immediate access to our proprietary actionable trade setups, market overview, 1 Hour, 4 Hour, Daily & weekly wave counts. Weekend webinar, Live Screen Sharing Sessions, Daily Technical Videos, Educational Resources, and 24 Hour chat room where they are provided live updates and given answers to their questions.

Published by Barchart
Home  •  Charts & Quotes  •  Commentary  •  Authors  •  Education  •  Broker Search  •  Trading Tools  •  Help  •  Contact  •  Advertise With Us  •  Commodities
Markets: Currencies  •   Energies  •   Financials  •   Grains  •   Indices  •   Meats  •   Metals  •   Softs

The information contained on InsideFutures.com is believed to be accurate but is not guaranteed. Market data is furnished on an exchange delayed basis by Barchart.com. Data transmission or omissions shall not be made the basis for any claim, demand or cause for action. No information on the site, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any futures or options contracts. InsideFutures.com is not a broker, nor does it have an affiliation with any broker.


Copyright ©2005-2018 InsideFutures.com, a Barchart.com product. All rights reserved.

About Us  •   Sitemap  •   Legal  •   Privacy Statement