The wave of questionable economic data washing over Wall Street during the past month has had a chilling effect on the retailing sector. Near the end of June, the World Bank downwardly revised its outlook on the global economy. Furthermore, the first week in July unveiled an unexpected drop in June's consumer confidence index and a weaker-than-expected June jobs report.
With consumers still struggling amid a floundering jobs market, the outlook for the retail sector is far from rosy. Overall, the Retail HOLDRS Trust (NYSE: RTH) remains locked in a long-term downtrend, with the exchange-traded fund (ETF) following its 10-month and 20-month trendlines steadily lower since June 2007. During this time frame, RTH has shed more than 28%. And, while the ETF has rebounded nicely from its March 2009 low, it has run smack into potential round-number resistance in the 80 area. Furthermore, RTH's 20-month moving average is quickly descending into the region.
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Joseph Hargett, 513-589-3800
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