Battle of the Retailers AMZN, WMT, TGT, and RTH

All strong trends for AMZN, WMT, and TGT. The RTH ETF is flashing warning signs...

Battle of the Retailers AMZN, WMT, TGT, and RTH
Photo by Tamanna Rumee / Unsplash

Every year in November investors and traders look toward 'Black Friday' as a way to gauge how well the end of the year is going to go. Black Friday is the day that retailers and shops are supposed to finally make money for the year, due to heavy demand for 'stuff.'

It's too early to tell but I want it to be a good year. Wanting and what will happen are two different things in reality.

I inspected the charts of Amazon (AMZN), Walmart (WMT), and Target (TGT) to see how their price action is. Then I compared it to the retail sector RTH ETF.

Amazon Stock Price, (c)

*Note: The red horizontal line is resistance, Green horizontal line is support*

AMZN is the darling of online shopping. I admit, we have an Amazon Prime account and we end up buying all kinds of stuff throughout the year. It's convenient, and fast, and we have access to all kinds of stuff with ratings and reviews. There are environmental downsides to this type of shopping but people don't care or give a shit.

Just for the record, you can't just look at AMZN as a mere retailer, it's much much more. So these prices reflect this as well and it's probably why its price is leaps ahead of just the plain retailers like TGT and WMT.

The price action shows something ominous. It looks like it created a Double Top formation and is failing to break out above my generated $3,500 level. The spinning Doji's the past few days don't give me much solace either.

Walmart stock price, (c)

*Note: The red horizontal line is resistance, Green horizontal line is support*

WMT on the other hand is working hard to catch up with AMZN, even if it's just to stay relevant. If you squint hard it might look like WMT has a Double Top pattern but I don't think it's formed one at all. It's looking pretty ok here and it might try to break out above $148 later this month if Black Friday is a good one. This is one to watch.

Target stock price, (c)

*Note: The red horizontal line is resistance, Green horizontal line is support*

TGT is my favorite from earlier this year. I was long a few 100 shares and finally got stopped out. I was trend trading it and it performed nicely until one volatile day hit my stop. There's always a lesson for when you trade trends with stops: one, it protects your money, and two, placing stops is an art form.

TGT has been on a strong uptrend since July 2020 and that's good news for this retailer. They're considered the 'cheap as Walmart but better quality' store in my area. Still, I have a Walmart nearby and I see the same people in both stores.

There's some resistance that TGT has to overcome to keep going higher and it looks like it can, but is it running out of steam?

Market Warning Signs - RTH ETF

Just looking at the VanEck Vectors Retail ETF (RTH) is giving me a pause. Sure it had some great gap-ups in price last week because the US Election went pretty smooth, but it made a Double Top. For those that don't know, Double Tops are typically a sign that a Stock or ETF is struggling to keep going higher.

A price breakdown happens when it sells off below the price of the 'V' in Double Top, which would be around the $143.50 level on the chart with the green resistance line. That's the level Investors and Traders will be watching.

RTH ETF price, (c)

*Note: The red horizontal line is resistance, Green horizontal line is support*

On the other hand, RTH could charge higher. It's hard to tell right now if it will keep going higher in anticipating a great Black Friday and the rest of the year.

I don't want to sound ambivalent, but that's what it's like if you're trading for the short term. Investing, or passive Investing is a lot simpler. You try to make an educated Buy decision (like when the market tanks a dump and lowers the prices for everyone) and then hold on.

How would I play this market right now? If I had positions in any of the stocks above, I'd probably sell half. Why? Because selling half makes you look smart twice. If the stock sells off, you look smart by locking in profits. If it goes higher, you look smart for keeping some skin in the game.

If I had no positions, I'd probably look at buying RTH. As a big fan of passive investing, I like to diversify my assets at low cost and RTH with a low expense rate of 0.35% is pretty good in my book. What I'd look to do is buy some RTH if it breaks above the resistance at $157. If it sells off to resistance at $143.50, I'd wait to see if the support holds to buy some. If it breaks below $143.50 I'd wait to see where it ends up.