RTH Retail ETF Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended

You hear it everyday on business television about how the American consumer is holding up the US recovery and markets. Manufacturing is in a quasi-recession. The couple-quarter spurts in growth, that are created by central banker money printing, continue occurring and each time they peter out the Fed, ECB, BOJ, PBOC and others are ready to cut rates and provide other forms of monetary stimulus.

So the economy is in a sideways funk. Companies are hesitant to spend on capex (large or expensive equipment and technology) due to the ongoing trade wars or it at least provides an excuse. The real underlying reason is sluggish demand but no one on Wall Street is willing to say this out loud. Against this hazy backdrop, the resilient American consumer carries the mantle of bullishness for the nation.

The US consumer happily skips to WMT or TGT each day, buying all that worthless crap that they do not need. Nonetheless, the consumer is supporting the US economy. If products are moving off the shelves, people remain employed to make more of those gadgets and tchotchkes. Watch inventories going forward.

Since strategists and analysts are looking for the American consumer to carry the load for at least a couple more quarters, are they in good enough shape? The ladies buy over two-thirds of the products in America with men buying about a third. So, by default, the American woman, in her average Size 14 stretch slacks and sensible shoes, with a purse full of coupons and store advertisements, is tasked with supporting the entire US economy on her thin shoulders.

The RTH retail ETF chart above says its over for the American consumer on the long-term monthly basis. The chart is ugly. The stoch's are overbot and the RSI is coming off overbot territory both agreeable to a relaxation downward in price. The rising wedge is ominous hinting at a drastic collapse ahead. The red lines show the RTH monthly chart in universal negative divergence. It is over. Price no longer has any fuel to move higher.

Despite the record highs, the ADX is down at 22 indicating that the trend higher is not considered a strong trend. That is odd since you would expect the ADX to be above 40 right now. The Aroon green line is at the ceiling with nowhere to go but down and the red line is at zero with nowhere to go but up both are bearish. All the above parameters are bearish.

Price has tagged the upper standard deviation band so the middle band at 107 is on tap in the months ahead and the lower band at 92 is also on the table. Price is extended above its moving averages requiring a mean reversion lower. More bearish stuff. In addition, the RTH weekly chart is also bearish and negative.

The chart is sick. It is telling you that a long term multi-month and multi-year top is in for the retail sector. It probably hints that there will be a lot of retail bankruptcies after the first of the year. It means that the great American consumer, mainly all our lovely ladies that do all the spending and buying, can no longer hold the weight of the US economy on their pretty, but thin shoulders. 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.