Consumption

SIA Weekly: A Look at Black Friday Retail, and the Energy Rally

by SIACharts.com

With Black Friday upon us and Christmas only a month away, this week in the SIA Equity Leaders Weekly, we will start by exploring the ever-anxious world of Retail spending and shopping. To do so we will discuss the SPDR S&P Retail ETF (XRT) and we will explore Wal-Mart Stores as a constituent of XRT. In our second chart we will discuss oil (CL.F) and explore a core energy holding of most, Canadian Natural Resources (CNQ.TO).

SPDR S&P Retail ETF (XRT) and Wal-Mart Stores (WMT)

The conversation is nothing new, but the anxiety remains, pressure is on for retailers as the holiday season approaches. With the continued proliferation of online retailing, this year could be more stressful than usual for brick and mortar chains (B&M). According to Moody’s Investor Service, more retailers are at risk of running out of cash or defaulting on debt now than at the peak of the last recession, and sub-par holiday sales could deepen their distress. Looking at the SPDR S&P Retail ETF (XRT), which holds a number of B&M retail chains, a YTD performance number of approximately -10% shows the real struggle and deepening performance drag for lot of the constituents compared to other U.S. Sectors. XRT is currently in the Unfavored zone of all reports on SIACharts and has been in the Unfavored zone of the SIA US Specialty Report (which compares Sector ETFs against each other) for more than a year. However, all hope is not lost, for those companies that command their B&M space and also push a strong online retail presence, success is possible.

Looking at the chart of Wal-Mart Stores (WMT), we have a great example of a chain that has thrived and participated in the online movement. Up approximately 42% YTD, Wal-Mart continues to shine. Since the end of summer WMT has exhibited strength running from the low $70’s to currently residing in the mid $90’s. Watch for a minor level of support to enter at $91.01, next we will find support $82.43, $79.23 and then again at $71.76. Resistance enters right at the psychological level of $100, and could enter again just over $105. With an SMAX score of 10, Wal-Mart Stores is exhibiting strength across the asset classes and could be a good opportunity if looking for a strong Retail play or you can use the SIA Reports to find other ideas as well.

Crude Oil Continuous Contract (CL.F) and Canadian Natural Resources (CNQ.TO)

Arguably a permanent and continuous topic of conversation in the Canadian markets, Crude Oil has been strong as of late, with many crossing their fingers for that strength to continue. Looking at the chart of CL.F, recent strength may be met with resistance just under $62 (not pictured here). However, moving from yesterdays close of $58.02 to $62 would be a pretty big move for oil prices as it hasn't seen this level since June of 2015. With a move of that magnitude we could see continued strength in a core energy holding like Canadian Natural Resources (CNQ.TO).

Trading in the mid $40’s CNQ.TO has enjoyed some of the same strength we have seen lately with oil prices. Currently sitting 3 spots outside of the green or favored zone, CNQ.TO has climbed itself out of the Unfavored zone rather impressively over the past couple of months. With a continued strength in oil, watch for CNQ.TO to potentially experience resistance at $47.13, and then again at a psychological level of $50. Any weakness could be met with support at $42.69, $40.23 and then again at $37.17. With an SMAX score of 10, Canadian Natural Resources is exhibiting near-term strength across the asset classes.

For a more in-depth analysis on the relative strength of the equity markets, fixed income, commodities, currencies, etc. or for more information on SIACharts.com, you can contact our sales and customer support at 1-877-668-1332 or at siateam@siacharts.com.

SIACharts.com specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment. None of the information contained in this website or document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. Neither SIACharts.com (FundCharts Inc.) nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.

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