Retail is getting wrecked.
The XRT retail ETF has tumbled more than 11% in May, its worst monthly loss of the year. The fund, which equal weights Amazon against smaller rivals including Gap, Macy's and Target, has also underperformed the broader market, which is down 5.5% in May. The average retail stock is down 13% this month.
JC O'Hara, chief market technician at MKM Partners, says it could get worse before it gets better.
"The weakness in the XRT which is the retail ETF, is nothing new. It's been weak for quite some time albeit earlier this year we traded sideways, we consolidated, but two weeks ago we broke critical support at $43 on the charts," O'Hara told CNBC's "Trading Nation" on Wednesday.
The XRT ETF had held above $43 since early January, when it bounced off its December bottom.
"Since then selling has really intensified," said O'Hara. "For me there's really no support levels until we go back to the December lows and that's a few dollars lower from here. So I think we want to stay away from this area right now."
The XRT ETF would need to fall another 6% before getting back down to its December bottom at $38. Before December, it had not seen a level that low since August 2017.
Fundamentally, the biggest threat to retailers should continue to weigh on the group, said Michael Bapis, managing director of Vios Advisors at Rockefeller Capital.
"The Amazon disruption is in full effect. They have changed the whole world. They've changed the environment and they're going to continue to lead," Bapis said.
Consider this, he says – since 2012, Nordstrom's market cap has been cut in half, while Amazon's has grown tenfold.
"I would only play [Amazon] in that space. Everything else can be on the side until this market gets past it. … Amazon has disrupted the market, they're leading the market, they're the number one player and I see that happening for a long time," said Bapis.
Amazon has rallied 21% this year, while the XRT ETF is down 1%.
Disclosure: Vios Advisors holds Amazon shares.