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Monday, we looked at the Retail Sector XRT in detail. 

And we determined that Monday’s action is still within the range of the huge sell off 2 weeks ago. 

Plus, should XRT struggle to close out the month back above the 23-month moving average, it will indicate the consumer and consumer spending is in a 2-year business cycle contraction. 

Granny Retail often works in tandem with the Transportation sector seen through the lens of IYT. 

IYT daily chart shows  

1. Price is under all indicators-January calendar range, 50 and 200-DMAs and in a distribution phase 
2. Transportation grossly underperforms the SPY 
3. Real Motion is in a death cross and bearish divergence to price. 
4. IYT did not have a clean bottoming formation. 

(Click on image to enlarge)

The weekly chart while struggling, in contrast to XRT Retail, IYT remains above the 200-WMA (green). 

Note the mean reversion on the weekly Real Motion indicator. But also note the bearish diversion with the 200-DMA above the 50-DMA (blue). 

Can IYT help XRT relax? 

Or will the current economic slowdown seen in the retail sector further drag down Tran? 

Looking at the monthly chart… 

(Click on image to enlarge)

We determined that XRT had to clear back above its 23-month moving average by March 31st or it closes out the first quarter in economic contraction based on a 2-year business cycle. 

You can see here why it is so important to watch the monthly chart in IYT. 

While Retail sits below the 23-month MA (blue), IYT holds it by a slim margin. 

2 Key members of the Economic Modern Family are at a precipice. 

IYT must hold around the current levels, which could help XRT relax. 

And it could just as easily close out the month under the 23-month MA, in which case you will have the consumer and the measure of how robust goods and people are moving both flashing a significant warning. 

ETF Summary  

(Pivotal means short-term bullish above that level and bearish below)  

S&P 500 (SPY) 574 the 200-DMA resistance 

Russell 2000 (IWM) Good bounce and needs so much more 

Dow (DIA) Back over the 200-DMA now 420 support 

Nasdaq (QQQ) 494 the 200-DMA resistance 

Regional banks (KRE) 58-59 to clear and one of the better-looking sectors 

Semiconductors (SMH) 245 overhead resistance 

Transportation (IYT) 65.00 pivotal 

Biotechnology (IBBIBB) 130 support 140 to clear  

Retail (XRT) 70 support to hold and thru 72 way better  

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