Retail stocks are proving that Amazon is not the industry-killer everyone feared

Amazon was supposed to break the retail industry.

Instead, the sector is rallying. Some of the group’s biggest stocks have recently hit multiyear highs, and the XRT retail ETF is inching closer to record levels not seen since 2015. Stocks like Costco, Nordstrom, TJX, Ross Stores and Five Below reached 52-week highs as recently as last week.

One chart watcher says a breakout to records could be in store for retail.

“It looks like we have a double bottom here that’s set up this push, and it looks like if the broader market does stabilize, XRT could punch up through $50,” Todd Gordon, founder of TradingAnalysis.com, said Friday on CNBC’s “Trading Nation.” “It looks like the recovery is in motion.”

A big move through $50 would mark a break above old highs. Gordon also notes that the XRT appears to have formed a "double bottom" after hitting a multiyear low just under $38 in early 2016 and again last August. That chart pattern typically suggests a technical level of support.

It’s been a painful road for retail to get back to these levels, though.

“For a long time it looked like Amazon was going to get the leg up on retail and really put them out of their misery,” said Gordon.

The stretch from 2014 to 2016 saw a soaring Amazon and a XRT ETF flatlining. From the beginning of 2014 through to the end of 2016, Amazon rocketed 88 percent higher. Over that same stretch, the XRT ETF was flat.

“All of a sudden we’re starting to get a bit of a closure of that gap here,” Gordon said. “XRT is catching back up to Amazon.”

David Seaburg, head of sales and trading at Cowen & Co., sees retail possibly breaking through previous highs to notch new records well above the old.

“I like the XRT. I think it can move from a trading perspective probably up to $55,” Seaburg told “Trading Nation” on Friday.

A move to $55 would mark an all-time high, blowing past the previous high of $51.25 set in March 2015. It represents a 2 percent rally from current levels.

While he sees more upside for retail, Seaburg is still far more invested in the Amazon growth story.

“I would make a bet on Amazon in the long term and stick with that story," he said. "I think the momentum there is much more fierce and it’s going to continue to move to the higher levels.”

The XRT is up nearly 11 percent for the year, putting it on track for its best annual performance since 2013. Amazon is doing far better — its shares are up 55 percent in what could be their fourth-straight yearly double-digit increase.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect