Friday, September 3, 2021

#RetailStocks Review $XRT

Retail Stocks Review
Those that view the message of the market on a daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bag holders of trend transitions.

Retail Stocks' overall trend, revealed by trends of price, leverage, and time, are defined and discussed in The Matrix for subscribers.

Subscriber Comments

Retail stocks are an important sector for consumption driven economies. Personal Consumption Expenditures (PCE) accounts for nearly 70% of GDP (national income). About 50% of PCE is driven from retail sales. In other words, 35% of national income is derived from retail sales.

Retail stocks often discount future retail sales. The performance of retail stocks; therefore, is an important timing tool for economic activity. The economy tends to recover when retail stocks outperform, and it deteriorates when they underperform.

The Retail to S&P 500 oscillator measures the relative performance of retail stocks against the broader market (Line 79 of the Trends Tab of the Matrix). The yellow highlighted down arrows (▼) tells us that retail stocks have begun underperforming the broader market in September. This is bearish for the economy.

Retail to S&P 500 Oscillator


The Economic Activity Composite (EAC), a measure of marginal activity for the US economy, is already deteriorating. Underperformance of the retail sector will only place further downside pressure on the US economy (Line 98 of the Trends Tab of the Matrix).

Economic Activity Composite (EAC)


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