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Sector Swoon Puts 5 Retail Stocks at Critical Levels

Retail stocks GPS, WMT, WFM, AEO, and URBN are all perched near key Fibonnaci retracement levels

Jan 5, 2017 at 3:30 PM
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Retail stocks are making monster moves downward today, following a string of weak holiday sales results. As the sector sells off, several stocks are approaching key retracement and Fibonacci levels. Today, we'll take a closer look at Gap Inc (NYSE:GPS), Wal-Mart Stores, Inc. (NYSE:WMT), Whole Foods Market, Inc. (NASDAQ:WFM), American Eagle Outfitters (NYSE:AEO), and Urban Outfitters, Inc. (NASDAQ:URBN) -- and break down what their technical setups could mean going forward.

Starting with the chart below, GPS -- down 3.8% at $23.29 -- has fallen below the 50% retracement of its 2016 high and low. This could spell trouble, as the technical level could once again act as resistance, reprising its role from the latter half of December.

gps daily jan 5

WMT is 0.2% higher at $69.17, but continues to struggle under the weight of the round $70 level, as well as the 38.2% Fibonacci retracement of its early 2016 lows and August high. If it's unable to break out above this double-barreled layer of resistance, the stock could move decisively lower -- especially given its bearish history in the first year of presidential cycles. On the fundamental front, WMT's subsidiary purchased online footwear retailer ShoeBuy.

wmt daily jan 5

WFM is having a dreadful day, down 2.4% at $30.19. More than that, the grocery stock has tumbled below the 38.2% Fibonacci retracement of its 2016 high and low from May and September, respectively. This area had been acting as support of late, and a breach of it could signal additional downside -- that is, unless this historic trend kicks in.

wfm daily jan 5

AEO has dropped over 3% to trade at $15.15, put it just below the 61.8% retracement of its early 2016 low and August high. Not helping the stock's case, the retailer said the "holiday sales season was choppy and highly promotional." Adding insult to injury, Cowen and Mizuho slashed their respective price targets to $17 and $16.

aeo daily jan 5

URBN has fallen 5.5% to hover around $27.48, placing it below the 61.8% retracement of its 2016 low and high. In late-December, this area served as support, but could now reverse roles to act as resistance.

urbn daily jan 5

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