{"id":2481,"date":"2015-01-09T22:45:48","date_gmt":"2015-01-09T22:45:48","guid":{"rendered":"http:\/\/www.elginamc.com\/?p=2481"},"modified":"2015-04-10T12:15:35","modified_gmt":"2015-04-10T12:15:35","slug":"technical-view-time-go-shopping","status":"publish","type":"post","link":"https:\/\/www.elginamc.com\/index.php\/technical-view-time-go-shopping\/","title":{"rendered":"The Technical View: Time to go Shopping"},"content":{"rendered":"

\"\"<\/a>The Christmas spirit is over and yet consumers have another reason to shop till they drop. Apart from unemployment improving which brings income to households, the persistent fall in oil prices gives an extra boost to consumers\u2019 disposable income. According to a recent report by Morgan Stanley “a 15 percent move in gasoline prices is worth $60 billion at an annual rate in consumer spending power, which is nearly 0.5 percent of disposable personal income”.<\/p>\n

Our chart below shows the effect that energy prices can have on retail sales.<\/p>\n

\"US<\/a><\/p>\n

Retail stocks as measured by the XRT Exchange Traded Fund (ETF) had a difficult year in 2014 trading sideways for the most part. However, the recent price action of the sector suggests a promising year ahead if all things remain equal. In early December price action finally moved the sector above its trading range and the prior resistance area became support. Another positive is the bullish flag continuation pattern completed to the upside. Bullish flags are a pause in the trend where the price becomes confined in a small price range of two parallels. An important point here is volume, which has to increase at break point – something that has been observed in our pattern below.<\/p>\n

\"XRT<\/a><\/p>\n

The sector also started to look interesting relative to the broader market (S&P 500). In our next chart below we use a Relative Strength (RS) analysis where we compare the sector vs the S&P 500.\u00a0 A rising RS Line indicates that retail stocks are outperforming (up more, down less) than the S&P 500 and the opposite when the RS Line is downward sloping. Retail stocks have taken a U-turn from being under-performers to out-performers. Momentum as measured by MACD has also picked up and crossed above the zero line, indicating bullish momentum in relative terms.<\/p>\n

\"image3\"<\/a><\/p>\n

With regards to individual stocks, the sector offers investors many choices. From general retailers to home improvement stores and apparel all can benefit from consumer euphoria.<\/p>\n

To give an example, Wal-Mart the king of retailers offers a nice illustration of a bullish chart. Similar to the retail sector, Wal-Mart\u2019s price action indicates a continuation in trend due to a break above the long term trading range and above the flag. One can also observe that volume expands at each break point.<\/p>\n

\"WMT\"<\/a><\/p>\n

Our second example is Rite Aid and though it is not directly associated to grocery or apparel goods, it is included in the retail sector as a food and drug retail store. Benefitting from stronger flu-relief sales, the retailer shows a very promising reversal chart. An \u201cIsland Reversal Bottom\u201d – a reversal pattern which starts with a gap down, trading sideways and then breaks above with a gap up at high volume – provides optimism for the stock.<\/p>\n

\"RAD\"<\/a><\/p>\n

The Christmas spirit is here to stay for a while as euphoric consumer spending is helped by lower oil prices, low interest rates and better unemployment numbers. Consumer confidence has also improved and all these can be a catalyst for retail stocks to do well.<\/p>\n

Costas Pierides CFTe MSTA<\/p>\n

Market Technician<\/p>\n

[hr]<\/p>\n

DISCLAIMER:<\/p>\n

All information contained herein and any opinions expressed in it are intended solely for the use of customers of Elgin AMC (\u201cElgin\u201d). This document is not, and should not be construed as an offer or solicitation to buy or sell any product, security or any other financial instrument. Any opinions expressed in this document are subject to change in that notice. This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and CySEC\u2019s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research. This document is not based upon detailed analysis by Elgin of any, market, issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of your own commercial judgment. This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. Elgin does not make any guarantee, representation or warranty, (either expressly or impliedly), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon informational sources believed to be reliable and prepared in good faith. Elgin does not make any representation or warranty, express or implied, as to the accuracy, completeness or correctness of this information. \u00a0Elgin does not accept any liability for any loss or damage, howsoever caused, arising from any errors, omissions or reliance on any information or views contained in this document. The value of any securities mentioned in this document may move up or down, and the value of securities denominated in other currencies will also be subject to fluctuations in the relevant exchange rates. Securities issued in emerging markets are typically subject to greater volatility and risk of loss. Elgin\u2019s officers, directors and employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time, add to or dispose of any such investment(s). This information is the intellectual property of Elgin. Redistribution or dissemination of this document is prohibited.<\/p>\n

Elgin AMC is a trading name of Numisma Capital Ltd. Numisma Capital Ltd is regulated by the Cyprus Securities and Exchange Commission (CIF licence no. 122\/10) Additional information from Elgin AMC is available upon request at info@elgingamc.com<\/p>\n","protected":false},"excerpt":{"rendered":"

The Christmas spirit is over and yet consumers have another reason to shop till they drop. Apart from unemployment improving which brings income to households, the persistent fall in oil prices gives an extra boost to consumers\u2019 disposable income. According to a recent report by Morgan Stanley “a 15 percent move in gasoline prices is […]<\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2481","post","type-post","status-publish","format-standard","hentry","category-investment-inspirations"],"_links":{"self":[{"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/posts\/2481","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/users\/41"}],"replies":[{"embeddable":true,"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/comments?post=2481"}],"version-history":[{"count":4,"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/posts\/2481\/revisions"}],"predecessor-version":[{"id":2532,"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/posts\/2481\/revisions\/2532"}],"wp:attachment":[{"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/media?parent=2481"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/categories?post=2481"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.elginamc.com\/index.php\/wp-json\/wp\/v2\/tags?post=2481"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}