Consumer Sector ETF XRT Has Some Words for You

Tuesday’s Daily was all about the metals. On Wednesday, gold, miners, and silver all rallied.

Is the bottom in on this last correction? Perhaps.

Two interesting areas to watch now are the one-year PCE rate-adjusted. And the retail sector is now on critical lows. In other words, we can see stagflation maturing before our very eyes.

The PCE is at levels close to a breakout over the 1980-1984 levels. That is the Fed’s go-to indicator. However, Granny Retail is super close to the precipice of a major breakdown under the 80-month moving average or 6-8 year business cycle. 

The Fed’s playing pickle ball. The last time we saw a breakdown under that moving average (if XRT fails it) was KRE Regional Banks in March. 

Can XRT hold here?

The Consumer Sector ETF XRT Has Some Words for You, and here they are. 

First, the test of the 80-month MA (green and price 56.24) on the last day of the month of May is mad interesting.

Secondly, do not assume it will fail until it does. And, even if it fails that MA, June has 30 days before we can determine what happens the second half of the year.

Thirdly, XRT could just as easily hold that level, offering a very low risk/reward trade or, more importantly, a relief for the rest of the Economic Modern Family and market.

Fourth, XRT is below the March 2023 lows but above the October 2022 lows at 55.32.

Finally, on the Daily chart, momentum is declining. In fact, our Real Motion indicator shows that XRT’s momentum HAS NOT been below a key Bollinger Band until NOW. Not in March and not last October.

Mean reversion potential? Sure. But also, fair warning that the consumer sector is yet another potential harbinger that the lower trading levels in SPY going back to March and/or October are not to be dismissed.

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June 2nd: Yahoo Finance

• S&P 500 (SPY): 23-month MA 420, the dance.
• Russell 2000 (IWM): 170 support, 180 resistance.
• Dow (DIA): 327-333 trading range for the week to hold or break.
• Nasdaq (QQQ): Not as strong a reversal top as SMH-b/c of APPL strength, but worth noting nonetheless.
• Regional banks (KRE): 35-42 range to watch.
• Semiconductors (SMH): Reversal pattern top; a drop near 138 would be a decent correction.
• Transportation (IYT): Like to see this hold 220 this week.
• Biotechnology (IBB): 121-135 range.
• Retail (XRT): 56.00 the 80-month MA.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education