Retail Stocks Are More Important Than You Think

The retail sector is the only industry group that reached its 2007 high in 2010. Since the retail sector's peak on April 26th, 2010 the industry group has lead the decline in the market. On July 6th the important retail sector has bounced along with the major indexes by about 6.00 percent. The SPDR S&P 500 ETF SPY has bounced about 8.0 percent. Therefore, the retail sector is lagging the market a little and this should be followed closely. Remember any economic recovery in the U.S. will require the consumer to start spending. A weaker retail sector is telling us that the expected consumer spending is contracting. Today the Retail Holders Trust RTH is trading lower by 0.82 to $88.91. While this important ETF has bounced off the daily lows it is still having trouble trading above it's daily 20 moving average. Therefore, the overall trend is still down for the Retail Holders Trust. Sears Holdings Corp SHLD is another leading retailer that has really struggled since peaking in early May at over $120.00 a share. Today the stock is trading lower by 0.82 to $63.99. The recent bounce in Sears Holdings Corp has been weak compared to most of it's peers in the retail sector. The stock will have some minor daily chart support around the $61.00 and $57.00 levels if it happens to break the recent lows. In any case the stock remains weak on the charts. Best Buy Inc BBY is another leading retailer that sells technology and electronic products. Best Buy Inc is trading lower today by 0.57 to $34.82. This is another major retailer that is still trading below it's daily 20 moving average. Should this stock break below the recent lows made on July 6th at $32.81 then the next important support levels will be around $31.00 and $28.00 respectively. The retail sector is under some pressure today after a recent short term bounce. This is the sector that lead the markets higher in early 2010. It is also the same sector that has lead the markets lower since peaking in late April. Therefore, this industry group is a leading indicator and must be watched very closely. Remember this so called economic recovery is based on the U.S. consumer spending again. When the retail stocks decline this is a sign of economic contraction. Nicholas Santiago Chief Market Strategist www.InTheMoneyStocks.com