Retail Stocks Stabilize as Technical Indicators Improve, Stockton Says

Retail stocks are stabilizing after a recent correction as short-term momentum improves and the SPDR S&P Retail ETF (XRT) shows a pending oversold upturn, Fairlead Strategies Founder and Managing Partner Katie Stockton said.

XRT has lagged the S&P 500 over both the short and long term. Its relative-strength ratio is testing support from a September low, while signs of short-term selling exhaustion point to a possible temporary improvement in relative performance.

The ETF’s technical outlook would strengthen if it moves above its 200-day moving average near $86.

Amazon.com retains a positive long-term technical outlook, supported by its rising weekly cloud model. Improving intermediate-term momentum favors a continuation of the uptrend and a potential retest of highs near $280.

Home Depot has also improved this month after a sharp drawdown in August and September. The stock remains well below its declining 200-day moving average, but signs of selling exhaustion after the recent sell-off support the possibility of a larger counter-trend rebound.