The continued improvement in the US economy, coupled with lower unemployment and a rebound in the housing market, is fueling hopes for an uptrend in the retail sector, and MoneyShow’s Tom Aspray highlights a few stocks that could benefit.
Stocks rebounded impressively Tuesday as technology shares led the market higher and bargain hunters stepped in to buy. The major averages need a close above last Friday’s highs to signal a further push to the upside.
The technical outlook does allow for more choppy trading over the near term and the futures are lower before the opening. It would likely take a daily close in the Spyder Trust (SPY) below $149 to signal a deeper correction. As I noted a couple of weeks ago, there is a seasonal tendency is for stocks to correct in February but a pickup in volatility is likely before a top is in place.
Though quite a few stocks are overextended as 79.5% of the NYSE stocks are above their 50-days MAs, which is down from over 85% a few weeks ago. There are also some stocks that appear to have just recently completed their corrections from the highs last fall.
The retail stocks showed some nice relative strength Tuesday as the SPDR S&P Retail (XRT) closed Tuesday well above last week’s highs on above average volume. These two retail stocks look ready to rally 10-20% and offer a favorable risk/reward for more aggressive investors.
Target Corporation (TGT) gapped higher Tuesday and closed strong. The quarterly R1 resistance is at $62.88 with the daily downtrend, line e, at $63.15.
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