A combo macro update and stock idea…
We have shown the positive correlation between Small Cap stocks and the USD, and in September 2017 reviewed a correlation between Retail (XRT) and USD. I did not stay on the story as the correlation temporarily interrupted, but lately it appears back on track.
The monthly chart shows a break to blue sky by the victims of Amazon.
The key is the USD bounce from long-term support, as we have been noting in weekly reports. If you believe that support will hold it might be worth considering what is positively correlated (more or less) to Uncle Buck and also what can be relatively insulated from the brewing trade tariffs uproar going on globally. US Retail seems to fit the bill.
There is a list of XRT components in the link above, but I have preferred to pick my own retailers, beginning with WMT and now including TPR (both as tracked in the NFTRH+ Charts & Notes segment each week) and as of yesterday (per Trade Log), ULTA, due to its chart having settled to what I perceive as support at the SMA 50. On a more loosely related view CTRL, IRBT (profit taken on this bottom play), ROKU and AMC are all items linked to the consumer.
Here is ULTA, bouncing a bit from the SMA 50 today, but still technically in consolidation.
The weekly shows that the support test was also a test of the upper bound of a ‘W’ pattern. The measured target, if this support area holds, would be around 300.
My daughter loves this place. She’s the same one who used and loved Etsy, which I completely took my eye off of (it’s stock is booming now). That’s not a reason to invest or trade, but it can’t hurt. ;-)
A stop loss is clear, at a loss of the SMA 50 to whatever degree personal tolerance permits. I bought it yesterday per the real-time Trade Log but anyone interested might wait for more testing and/or confirmation of the SMA 50 and lateral support.
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 your further research if interested. I will not personally buy every item highlighted and will sometimes sell (ref. Trade Log) any item that I do buy below target (assuming I’ve not stopped out or sold for some other reason), 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.
