Retail Gets Smoked

Today the retail stocks have come under severe pressure. The popular Retail Holders Trust RTH is trading lower by 0.93 cents to $89.93. This ETF tracks a basket of the most popular retail stocks that are publicly traded. Therefore, this particular ETF will generally tell us how the retail stocks are doing as a group or sector. As we all know the retail stocks are very important since the United States consumer spending accounts for roughly 70% of the nation’s gross domestic product (GDP). Many of the leading retail stocks are trading sharply lower today and this could be troublesome for the economy looking forward. J.C. Penney Company JCP is leading the decline today falling by over $2.01 or nearly 8.0 percent to $23.47 a share. This leading retailer is now trading below its daily chart 20, 50, and 200 moving averages which is a bearish indication. The stock will have some daily chart support around the $22.00 area in the short term. Should this leading retail stock decline sharply below that support level the next area of important support will be around $20.00. In any case the chart looks weak at this time and the stock could remain under pressure. Kohls Corp KSS is another leading retail stock that is trading lower by $1.96 or 4.0 percent to $47.03 a share. This daily chart stock actually looks worst than the J.C. Penney chart. This stock is also trading below its daily 20, 50, and 200, moving averages. This stock will have some daily chart support around the $45.00 area in the near term. Should this stock break below the $45.00 support level the stock could test the $42.00 area which is the next important support area. Nordstrom Inc JWN is trading lower by $1.55 to $33.95 a share. This stock is actually still trading above its daily 20 moving averages. Remember this company caters to the more affluent shopper and is less likely to be effected the same way in small economic downturns. The one real negative for this stock chart is that it is trading still trading below its daily 50, and 200 moving averages which still a sign weakness in the stock. Any way we slice it or dice it the retail stocks are selling off sharply today. It is important to remember that when the retail stocks decline it is a direct reflection on the U.S. consumer. In order for this inflationary rally scenario to work that has been orchestrated by the U.S. Treasury and the Federal Reserve Bank the U.S. consumer needs to spend money. Remember, seventy percent of the United States gross domestic product is consumer spending. At this time that necessary spending is limited.