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Tickers in this Article: XRT
Major indexes traded sideways and crept lower to kick off the week on Monday. Investors held off from pulling the “buy” trigger as lackluster economic growth data from Japan collided with uncertainty surrounding several key releases taking place on the home front later this week, including CPI, industrial production, and housing starts .

Our chart to watch for today is the SPDR S&P Retail ETF , which could experience volatile trading as investors digest the latest monthly retail sales data. Analysts are expecting for retail sales to have increased by 0.3% in July, which would mark a slight deterioration from the previous expansion of 0.40%. 

Chart Analysis

Consider XRT’s one-year daily performance chart below. This ETF has been trading sideways within a very tight range since settling above $80 a share on 7/9/2013; since then, XRT was able to briefly peer above $83 a share, but the bulls and bears have remained at odds for the most part as price action has failed to produce a breakout in either direction. The ongoing sideways price action can be interpreted in two ways; for the bulls, it’s arguable that investors have been accumulating XRT as evidenced by the fact that it has held above key support even amid low trading volumes. For the bears, XRT’s sideways price action can be interpreted as pessimism in the face of uncertainty surrounding economic growth at home and potential Fed policy changes .

Click to EnlargeToday’s retail sales report should offer valuable insights as to whether or not U.S. consumer spending can continue to bolster this ETF higher; however, because this data is backward looking, investors tend to place more emphasis on the outlook for the month ahead, which can make for volatile trading on the day of the release itself .

Outlook

If the latest monthly retail sales report comes in better-than-expected, XRT should have the wind at its back; in terms of upside, this ETF must face stiff resistance as it looks to post a new high above $83.24 a share. On the other hand, disappointing retail sales numbers can bring out the bears on Wall Street and spark a broad-market correction; in terms of downside, this ETF has immediate support along $80 a share followed by major support at the $74 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

Follow me on Twitter @SBojinov

Disclosure: No positions at time of writing.

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