The S&P Retail Sector SPDR ETF - XRT - has been having a rough time recently. This week, amid a wider market sell off, this ETF dropped 2.43% and it is already down nearly 9% from its recent highs. Considering the kind of surge US Sector ETFS have experienced in the past 6 months or so, we believe this drop is somewhat significant.
Also, XRT - for the first time in over a year - closed below its 40-week SMA somewhat convincingly this week. The sell off in this sector has been rough in the past few weeks and its relative strength has dropped sharply over the last few weeks. Our Quick Rank system is ranking this ETF as *E* - which signifies unattractive ETF technicals.
US Consumers oriented sectors have performed exceedingly well over the year especially with the job market holding up and the US economy on balance doing far better than in the earlier years. With the Fed tapering set to begin are investors worried about consumers slowing down?
From a different perspective, US markets retreated somewhat significantly in a first sign of a meaningful pullback from levels some investors considered excessive. While US pulled back, emerging markets also tumbled even more with some ETFS likely becoming attractive for long term investors. At the other end of spectrum, all this risk aversion hasn't caused Gold to surge. This is another important divergence investors will be watching.
If XRT doesn't get much support at its 40-week SMA in the coming weeks, it could be a sign US markets may be showing the first sign of restraint which could take major benchmarks down even further.
Good Luck and Happy Trading!