The reports of the death of retail have been greatly exaggerated, and, in fact, the sector looks like it's in recovery mode. If that turns out to be the case, there are several stocks that have been underperformers in the space which now could become the new outperformers. The interactive chart compares the performance of the VanEck Vectors Retail ETF (RTH) , and the SPDR S&P Retail ETF (XRT) , relative to Target (TGT) , Ralph Lauren (RL) , Michael Kors Holdings (KORS) , and DSW (DSW) , and it is clear that these four stocks have underperformed the border retail space.
The laggards, however, are starting to show some signs of improving price momentum and money flow, and now look prepared to break above resistance and potentially see a period of outperformance relative to their peers.
The Michael Kors chart shows the stock trading in a horizontal channel since February, below pattern resistance in the $38.60 area. During this time, the relative strength index has returned to its center line and daily moving average convergence/divergence, which is overlaid on a weekly histogram of the oscillator, has moved above its centerline on both timeframes. The stock price is back above its 50-day moving average and Chaikin money flow is in positive territory. An upper candle range close above the channel is a long entry point using a trailing percentage top.
The stock price of footwear and accessory company (DSW) saw wide swings in 2016, but this year that volatility has moderated and for the past two months it has been consolidating under resistance in the $21.00 area. Stochastic has been moving higher in bullish divergence to price and the vortex indicator, designed to identify early shifts in trend, has made a bullish crossover. The stock was up 3.6% in Friday's session, closing near its high and re-testing resistance, and it is a buy at its current level using an initial stock under an uptrend line drawn off the March lows.
Ralph Lauren designs and markets clothing and lifestyle accessories, and recent price action is similar to the price action on the Michael Kors' chart. It has been consolidating in a slight rising triangle under horizontal resistance in the $82.00 area, and has recaptured its 50-day moving average. Moving average convergence/divergence has been moving higher on multiple timeframes, and the money flow index, a volume-weighted relative strength measure has been improving during the recent consolidation. An upper candle close above resistance is a long entry point using a trailing percentage stop.
A rounded bottom formed on the Target chart and the stock has broken through its declining 50-day moving average and a down trend line drawn off the highs since December of last year. The relative strength index came out of an oversold condition in late March and has tracked higher, and now the vortex indicator is reflecting the start of a new uptrend. These positive price momentum readings are being reinforced by the positive money flow readings. The stock as a buyer is current level using a percent and stop under the long-term downtrend line.