Data Release Could Push Retailers Higher
Retailers have been under pressure after several large companies reported disappointing sales for December. As a group, the sector is now oversold and SPDR S&P Retail ETF (NYSE: XRT) starts trading on Monday with a PowerRatings of 10.
Economic data scheduled for release on Tuesday could be a catalyst for the retail sector. The Census Bureau will release a report on retail sales for December before the open on Tuesday, ending speculation about how strong sales were in the holiday season. Analysts expect a year-over-year increase of 4.4%. A surprise in the report could lead to gains in the stocks of retailers.
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
In the past, buying stocks with a rating of 10 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 5.9%. Other entries and exits also show high winning percentages and large average gains.
XRT should be considered a buy under $83.26.
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All data is as of the end of day on 1/10/2014.