According to stock market seasonal trends, retail stocks are “supposed” to turn bearish shortly after the holiday shopping season. The first quarter of the New Year is typically the worst for most retailers. This year is proving to be an exception to that rule.
Retail stock internal momentum has soaring to higher levels on a daily basis of late. Note the chart below, which shows the short-term directional indicator (blue line), the short-term momentum bias (red line), and the internal trend (green line). All are traveling in unison in a near-vertical path. This implies the path of least resistance for the retail stocks is still to the upside in the near term.