NFTRH+; A Hated Sector That is Pro-USD

We have all heard about the death of traditional Retail as Amazon, one of my favorite companies by the way, eats traditional retailers alive. A great story and maybe even true over the longer-term.

But one thing I find interesting is how the decline in the Retail sector has generally coincided with the decline in the US dollar for most of 2017. So how much of the bearish Retail narrative is real and how much is financial media and its easy rationalizations?

XRT is (barely) breaking above the SMA 200 today and the US dollar is breaking above its SMA 50 (the lower chart panel is not updated for today). But I think it is more than coincidence that these two things are happening together. If XRT can hold above the SMA 200 and the noted resistance area the rough target would be about 45. But aside from technical targeting, I think this much hated sector can be a tool for a strong dollar view, if that is indeed what comes about.

xrt and usd

Recall during the previous strong dollar phase we’d want to invest in services and domestic business. Here are the boring businesses the comprise XRT’s top holdings.

xrt holdings

And here are the sectors/industries represented in the fund.

xrt sector allocations

For reference, here is a longer-term view of the rough correlation between USD and Retail.

xrt, usd

Sure, this is not an exciting idea. But right now I don’t want exciting. I want to see if we can find some boring, out of favor items to use insofar as the broad market remains stable.

A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.