Stocks of retailers had an amazing run off the 2009 lows and earlier this year the Retail HOLDRS Trust (ARCA: RTH) exchange traded fund (ETF) posted an all time high.  For two years many investors argued the ‘rise of the retailers’ so to speak wasn’t’ justified.  As the Retail HOLDRS Trust (ARCA: RTH)  formed a double top and new all-time highs earlier this year however some of those calls have come to fruition. 

On the weekly chart looking back to mid 2009 we note the up-trend (white line) that is still in place.  The ETF again bounced off that support line in early August.     

 

On the daily chart looking back to September 2010 note the intermediate uptrend that the Retail HOLDRS Trust (ARCA: RTH) fell through in early August.  After finding a bottom at the aforementioned longer-term uptrend the ETF has been in bounce mode but will soon find serious resistance.  The triple layer resistance in this case is made up of the intermediate uptrend (white line) and both the 50 and 200 day simple moving averages.       

 

With the broader market still in oversold territory and currently enjoying a relief bounce it is too early to short the Retail HOLDRS Trust (ARCA: RTH) just yet.  If and when this ETF however gets into the $105-$106 area and the S&P 500 around the 1240-1260 area a high probability short setup might occur.  At that point initial stops could be set near $110 with a final profit target as low as $90.

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