Retail can't seem to get it together. Many names don't seem to be buying that 2015 is going to be a good year for the consumer. Many of these names topped when oil bottomed in March, so you have to ask yourself if you are bullish or bearish on oil prices if you are looking at buying retail. The charts on a few names don't have me convinced here that oil is done going up and retail is done going down.
Burlington Stores (BURL) is trying to shake off a potential breakdown here this morning. The stock topped in March, along with many others in the group. After a rough last half of April, bulls tried to right the ship. We've had this sideways action for two weeks, but it appears to be nothing more than a bearish flag here.
I see three potential outlines in the price action. The first is a reversal through resistance of $52, then on up through $54 and the bulls are happy again. Possible? Yes, but it feels highly unlikely. The second is buyers manage to avoid this breakdown to end the week and BURL forms a new trading channel between $50 and $54. I think this only happens if oil reverses lower. Third, the resistance downtrend line currently at $52 continues to force the stock lower until we reach the $44 to $46 area. There is nothing in any indicator here, and I threw on a bunch, to signal bullish action. There isn't a single bullish divergence nor anything other than reaffirmation that the recent price pattern was a bearish consolidation. If not, then I would expect to see something remain bullish even after this two-day price drop. It just isn't there.
BURL isn't alone. We can see a very similar setup in Nordstrom (JWN). These two names appeal to very different shoppers, yet the stocks apparently appeal to the same buyer. JWN has the same setup in the secondary indicators, almost like a twin. The indicators, although bearish, aren't quite as weak as for BURL, but JWN hasn't come as far off the top as BURL, and also did not run up as much as BURL.
From a ratio standpoint, these two charts are very much in line. JWN needs to recover to $75 before the end of the week here and push over $77 next week to get back to neutral. Otherwise, I am targeting the $70 to $72 area on downside projections. The stock is stuck in a very clear six-week price channel and is threatening to find itself at a new closing low today without some help this afternoon. I don't see hot money or new money chasing 2015 lows at the moment.
While it's still been a tough market to short, these bearish setups at least offer a glimpse at what not to buy while the churning of equities continues.