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Same-store sales data reported last week confirmed strong results for America's retailers.
The upbeat news was widely expected, given supportive March weather and an Easter holiday falling a week earlier than it did in 2006.
But the results still confirmed that consumers are holding their own, despite growing fears of a slowing economy.
Wall Street greeted Thursday's positive news with quick selloffs in many popular storefront names.
This negative reaction pointed to fears that April comparisons will be more difficult, given the absence of the time-shifted holiday.
Sector issues recovered into the weekend, but still underperformed the major indices by a wide margin.
The culprits weighing down the retail sector are easy to itemize.
Higher gas prices, tightening credit and strong dependence on favorable Forex rates are all keeping a lid on the group's upside progress.
But the American consumer hasn't flinched yet, despite the negatives, and could eventually win over the hearts and minds of skeptical analysts.
has been a major underperformer since its bear-market decline bottomed out at $1.50 in late 2000. The good news is it's finally showing the upside potential that attracts strong capital inflows. The stock rallied above three-year resistance at $6.50 last week, completing a long-term cup-and-handle breakout.
This move sets the stage for an uptrend that could reach secondary resistance between $9.50 and $10 in the second quarter. That would offer an excellent percentage gain from recent closing levels. However, caution is advised in the short term. Last week's rally spike looks unsustainable, so a pullback that reaches $6 to $6.25 might offer a better entry point.
to see more of Alan's retail charts.
At the time of publication, Farley had no positions in stocks mentioned, although holdings can change at any time.
Alan Farley is a professional trader and author of
The Master Swing Trader
. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback;
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