I sometimes have trouble even putting together an outfit that matches. I have to thank my wife for making sure I don’t escape the house wearing something embarrassing. As such, I couldn’t tell you the difference between the various clothing stores and I don’t care. What I can tell you is that some charts in this industry have been catching my eye lately.
The apparel industry may not be as exciting as countless others, but I think there may be some potential here for some trades. First, let’s take a look at the recent relative strength these apparel companies are showing against the market. Here’s the Dow Jones US Apparel Retailers Index relative to the S&P 500. To me, it looks like we may have put in a temporary bottom and the apparel companies have been noticeably outperforming the S&P for the last month.
So the apparel retailers are showing some relative strength lately. That’s good. We want to be where the strength is. Now let’s get to the good stuff – some charts with nice setups right now.
First, let’s look at Express (EXPR). This one had a huge break lower and then a huge post earnings gap higher in August. Since then, it’s been consolidating in a range capped by about $6.70. Just today, it moved out of this short term consolidation and looks like it wants to go higher and perhaps fill that gap from late May.
Next is Signet Jewelers (SIG). I’m not sure how this is considered an apparel retailer but they didn’t ask me when they developed the index. In any case, I see some potential here. This area around $64 was support, turned to resistance, and again acted as support recently. I definitely would not want to be long much below this yellow box. We are approaching the downsloping 200 day simple moving average. This is probably the most watched of all moving averages and is used to identify the longer term trend. I am not a huge user of moving averages, but a break above the 200 day could potentially bring in buyers.
Speaking of springing off the 200 day, check out Urban Outfitters (URBN). This has kind of a cup-and-handle look to it (with a really small handle.) Regardless of what you call it, the area just below $24 was resistance and price broke above it. This is bullish and I like this one above this level. Probably my favorite of the bunch.
There are lots of other names in this industry that are also worth looking at. Some of the individual stock breakouts and the overall industry outperformance are pretty new though so I’m still a little skeptical. I’m always skeptical though. That’s what stops are for.
Thanks for reading.