This column was originally published on RealMoney on July 10 at 12:00 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.Retailers posted mixed results in June. The hit-or-miss data released Thursday morning set off sharp rallies and nasty downturns throughout the sector. Let's review the most prominent action to see what clues it offers about which issues are likely to provide leadership in the upcoming holiday season. The recent performance of the Retail HOLDRs Trust ( RTH) suggests that the outlook for the sector is uncertain. The exchange-traded fund sold off for five days in a row last week, dropping to the bottom of its three-week trading range. The ETF has been churning below resistance at its 50-day and 200-day moving averages for the last two months. Last week's decline pivoted off the resistance of the 50-day moving average at $95. This suggests that the Retail HOLDRs Trust will test its June lows soon and probably break down. The next pivot will likely come at longer-term support near $90.
The LaggardsNo mercy was shown to retailers that missed their June sales numbers, even by a few bucks. This brutal dynamic suggests that shareholders will have no patience with mediocre performance in the coming months. Starbucks ( SBUX) reported that June sales rose 6% compared to the consensus expectation of 7%, and it got crushed. The stock fell almost 2 points in a vicious decline that dropped into its May lows. While it closed near the high of its daily range Friday, conditions are in place for a breakdown that eventually fills the February gap at $32.
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