RTH Retail ETF Daily Chart; Mother of All Short-Squeezes

The RTH retail ETF (exchange-traded fund) rocket launches into a parabolic price move over the last month (22 trading days). RTH jumps from 81.60 to 90.82 a huge +11.3%. Everybody and his brother was short the retail stocks and once the sector caught a bid, and short-sellers began covering, the move went parabolic with the shorts running for their lives. The short-covering creates the rocket fuel sending price into the stratosphere; the mother of all short squeezes. The RTH is rallying a half-percent per day every trading day over the last month.

There are 10 major retailers in the RTH ETF including AMZN, HD, WMT, COST, LOW, SYY, TGT, ROST, TJX and CVS. Amazon's big jump higher over the last month creates much of the upside joy in RTH. Investors started shorting retail stocks heavily this year and Joe Schmo jumped into the game as well; all have received their heads on a platter.

Note the tight standard deviation bands in early November (purple arrows) that forecasted a big move on tap. Tight bands, however, do not predict direction only that a huge move is about to occur one way or the other. This one was obviously up. Consider how surprising that was since market participants were all on the short side of the boat. Once the upside move started it accelerated since shorts had no choice but to cover (buy stock to cover the short position and exit the trade).

Price has violated the upper band so the middle band at 86.78, and rising, is on the table. The red lines show negative divergence for the indicators as RTH prints new highs except for the MACD line that remains long and strong. The RSI and stochastics are overbot wanting to see a pullback. The rising red wedge is a bearish pattern.

RTH will likely weaken for a day or two but the long and strong MACD line will probably create another high. At that time, the MACD will likely go neggie d along with the other indicators and the top will be in on the daily time frame. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.