Retail is a barometer of economic activity if retail is rising it means people are out spending which reinforces our economic cycle, and the next 4 months are the most active retail months of the year. Kids are going back to school,college sports gets into full swing, and pro sports are not far behind. This all very good for retail stocks especially sporting goods like Dicks Sporting Goods (DKS) and Cabellas (CAB).
Joy Global has lost 50% of its value since February. JOY is still a very strong company worldwide it has traded down to a 3 year support level which also matches up with the 61.8% fib level from the uptrend it began at $15 in $2009.
As I have watched the S&P stall out here just below $141 there are some very interesting technical readings that are flashing sell signals. When the S&P climbed from 1160 to above 1400 from December to April the Relative Strength Index (RSI) went from a bearish reading and steadily climbed along with the S&P to where it became overbought, which is typical for a momentum indicator in a strong uptrend.
There hasn't been a lot to talk about the last few days in what is making the market move. Oh that's right it's barely moving which can make trading a bit difficult. Not to fear I have been saying the last few days we are close to get some pullback. I know I have said that for two days straight and into a third, but the technical levels are revealing that things in the market should be pulling back soon. There a couple of good reasons for a pullback right now.
Dicks is in the late stages of a cup and handle pattern and is close to a break out. It was in a sustained uptrend and then pulled back 14%, a nice pull back percentage for a cup and handle formation. It has annual EPS growth rate of 28% and last quarter sales were up 15%. It may just need to pull back to form a proper handle and if that happens over the next 2 weeks Dicks could be ready to take off going into the fall, winter, and holiday shopping seasons.
