I’ve been talking a lot about retail shorts lately, so I’ll share some more now. First up is American Eagle Outfitters, having collapsed beneath a symmetric triangle and recovered back to its failed underside.
Even though the market was bug-eyed bullish on Friday, roaring to highs never before seen in the history of humanity, retail continues to crumble. Macy’s, already down about 70% from its peak, fell nearly 8% on Friday alone. The scary thing is that if the analog I’ve pointed out dozens of times actually comes through, it’s just going to keep spiraling toward, well, $0.
Retail continues to perform nicely for the one bear left on this entire planet. Chico’s, for instance – – purveyor of threads to women of a certain age – – is the gift that keeps on giving.
One of my oft-mentioned retail shorts is getting zapped this morning, with Chico’s – – purveyor of fashion to women of a certain age – – off about nine percent. I think it’s got LOTS more to go.
Of my seventy-five existing short positions, thirteen of them are retail-related. This is definitely one of my favorite sectors right now, so much so that I also own put options (January $43) against the retail fund XRT. Here are seven of them, zoomed in to interesting recent activity:
After dramatically dropping 34% from its historical high of 151.85 from mid-2016 to a low of 99.98 in May of this year, the Dow Jones US Retail REITs Index has been stuck in a sideways trading range and is attempting to maintain a stable position above a long-term 40% Fib retracement level of 102.42, as shown on the following Monthly, Weekly and Daily charts.
Longer term, the Monthly momentum and rate of change technical indicators are hinting of further weakness.
In the medium term, the Weekly momentum and rate of change technical indicators are hinting of potential strength. (more…)