RTH Retail Weekly Chart M Top H&S Gaps

Retail is setting up as a potential short play. Retail is a vital sector that provided the push higher for the broad markets over the last month or two. Note the rising wedge in blue, the overbot conditions and the negative divergence also shown by the blue lines. This created the May spank down and a potential head for an H&S pattern. Over the last couple weeks, price came back up near the prior highs but note the red lines that show no underlying strength justifies the higher price move. Over the last two months, however, note the green lines for RSI, MACD and stochastics. In this short time frame, these indicators want to see price make one more stab higher and likely create an M Top. This would be the entry area for a potential short play on retail. A gap exists at 111.0-111.5 and serves as an upside target as well as the recent high at 112.5.

The H&S pattern shows a neckline at 97.5 so the target area, should the neckline fail, is 82-83, also sturdy support and a gap fill at this area creating a confluence and providing the target some street cred. Watch to see if the RSI loses the 50% level as time ticks by. Projection is to enter short during a final stab upwards that will create an M Top. Lower prices are projected for the weeks and months ahead, which would also weaken the broad markets. The holiday sales reports will obviously impact the retail sector greatly. In addition to shorting RTH or other retail tickers, ETF's such as SZK and SCC are of interest on the long side although caution is warranted as these are thinly traded. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.