Retail Stocks Stuck in Limbo: Will RTH Break Free and Soar? | Don’t ignore this chart!

The VanEck Vector Retail ETF (RTH) is a unique beast. It holds 26 retail stocks, with 70% in consumer discretionary and 30% in consumer staples. It’s tilted toward cyclical growth, but it takes up enough “defensive” space to not be hit hard when the economy slows down.

RTH showed up in a StockCharts scan on Wednesday.—”You have entered the Ilmoku Cloud.” It’s not that good, but it’s improving. SCTR With a score of 64.1 (next day), this particular scan effectively identifies “good” stocks that are potentially on the downside.

Retail: The Macro Situation

Let’s take a look at the weekly chart of RTH over the past 10 years.

Chart 1. RTH’s 10-year chart. On a broad time scale, this is just a pure upward trend.

Since the pandemic collapse in 2020, RTH has become wider and more volatile. However, the 50-day and 200-day simple moving average (SMA) It has maintained a steady upward trend for 10 years.

Looking at relative performance, RTH, which is comprised of 70% consumer discretionary stocks and 30% consumer staples stocks, outperforms the former by 26% and the latter by 68% (see the relative performance of RTH:XLY and RTH:XLP in the panel below the price chart) ). ). Chaikin Money Flow (CMF), The lowest panel showed steady volume flows and buying pressure, fueling the rise in RTH.

So what does this mean for RTH today?

RTH’s range reflects broader retail uncertainty

Looking at RTH’s daily chart, we can see that the ETF was trading lower in April and has been trading in a small range since then.

Chart 2. 6-month daily chart of RTH. The widening of support and resistance levels reflects the underlying uncertainty typical of retail discretionary forecasts.

The sideways movement between support and resistance (about $196 to $205, see blue dotted line) reflects the limbo in which the broader retail industry is more or less locked in, much of which depends on whether the Federal Reserve will maintain, cut or even raise interest rates. The focus was on whether or not. . Nonetheless, traders and investors will be at gunpoint (as is usually the case), speculating on the outcome where the fundamentals will later be confirmed or rejected. This action can be clearly seen when the price exceeds two resistance levels or falls below a short-term support level.

CMF suggests buyers may have a technological edge, but Ichimoku Cloud (especially Kumo) went from bullish green to bearish red. The highest level suggests resistance and is consistent with the market-based resistance levels we are currently seeing. If the price breaks above the current resistance level, RTH will challenge the all-time high of $213.

But what happens if it falls below $196? Take a look at the chart below:.

Chart 3. 8-month daily chart of RTH. How far can the price fall below support?

In the absence of upbeat economic news driving discretionary retail, we can expect the price to fall below support at $196. Some bulls may try to jump in at $193, but there is a 38.2% Fibonacci retracement. Buying activity is more likely to pick up at the 50% ($187) and 61.8% ($180) levels. Roughly This coincides with RTH’s 2022 and 2023 highs (as seen in the weekly chart above).

All eyes are on the Federal Reserve, along with other economic reports and developments that could influence market sentiment.

takeout

The VanEck Vector Retail ETF (RTH) offers a balanced mix of consumer discretionary and consumer staples stocks. Despite recent volatility, the long-term upward trend remains intact. The key is to watch how they react to upcoming economic news and Fed decisions. Whether RTH will be higher or lower than the current level is planned before market activity can be expected to be at that level..

How to run an Ichimoku scan (or technical scan)

• Log in to your StockCharts account
• movement your dashboard, In the Member Tools window, scroll down to reports and moreClick and sample scan library.
• The Ichimoku pattern is in the candlestick patterns section.
• Click Next. run Click the button next to Scan (in this case, entering Ichimoku Cloud) to see a filtered list of stocks and ETFs.

Why are you doing this scan?

As mentioned above, you can run this scan to see if strong stocks are falling, especially when the broader market is rebounding. Depending on inventory, the Ichimoku Cloud can often act as a range of support, making it an ideal tool for identifying “buy the dip” opportunities.

Additionally, it is a good idea to look at other indicators in addition to price action to avoid falling on a knife edge when trying to buy a dip.

disclaimer: This blog is written for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.