Wal-Mart rocked investors this week after the company cut its sales and earnings forecasts. The news sent the stock plummeting 12 percent in the last two sessions, and that prompted one trader to short the entire retail space as earnings season kicks into high gear.
"This space has been very weak this year," Andrew Keene said Thursday on CNBC's "Trading Nation." The XRT, the ETF that tracks retail stocks, has trailed the broader market so far in 2015, down 5 percent while the S&P 500 has fallen 2 percent.
In addition to the weak performance relative to the broader market, Keene noted that the ETF has recently rallied to its short-term 50-day moving average, which has proven to be a sell signal in recent months. "I think the XRT is headed lower," said the founder of AlphaShark Trading.