Retail HOLDRS

Here is a five year chart of the RTH:

We can see price is near the first regression line.  Volume is also getting thin as price pushes higher.  This is a good clue to look for other inflection points in retail names.  Current names in the Retail HOLDRs.

Nine Month vs. Two Year

Right now it appears the nine month and two year channels are in play.  There are many retailers near nine month lows.  Macy’s is one example:

The caveat is the broader market.  Right now retailers are a mixed bag.  Many of the smaller names are at two year highs, and several of the larger names are near nine month lows.  Also, dip buyers have been getting weaker.  What has been consistent is to short stocks as they near two year channel highs.

Looking at Macy’s on a two year chart shows a clear downtrend.  It’s also at a one sigma regression line.  So the question is:  Does Macy’s rally to the upper channel or slide back to the middle?

Timing

So the trick is to find that slice of time where you have a 95% chance of being right.  Mean reversion traders look for price near high/low channel lines. Price matching on multiple time frames can provide some great low risk entries.

Gallery of 37 Retail Names

Here is what a scan of 113 retailers produced.

Retailers for Xmas

A list of 37 names near various inflection points.  The two year charts trump the nine month charts for longer term swing trades.  Hopefully this will be useful to you in your trading.

Wishing you a wonderful winter season!  -GTM