(See the video above for Katie’s complete chart breakdown.) Retail stocks are stabilizing following their recent correction. Improving short-term momentum and a pending oversold upturn in the SPDR S & P Retail ETF (XRT) support a short-term relief rally within the long-term uptrend. The technical picture would improve further above the 200-day moving average (MA) near $86. Relative performance for XRT versus the S & P 500 Index (SPX) has been very weak, with retail stocks having lagged the broader market short- and long-term. The ratio is testing support from its September low, and signs of short-term downside exhaustion suggest retail stocks may see a temporary recovery in relative strength. Retail bellwether Amazon.com(AMZN) maintains a positive long-term technical outlook, supported by its rising weekly cloud model. Intermediate-term momentum is improving, favoring a resumption of the uptrend and a potential retest of the highs near $280. Laggard Home Depot (HD) is acting better this month after a big drawdown in August-September. HD is trading well below its declining 200-day MA and appears overextended within its long-term downtrend. Signs of downside exhaustion following the recent sell-off support a bigger counter-trend rebound. Katie Stockton is the Founder and Managing Partner of Fairlead Strategies. DISCLOSURES: (None.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
