RETAILERS TURN UP -- WAL MART NEAR BREAKOUT -- JCPENNEY AND TARGET UPTRENDS -- KOHLS AND TIFFANY ARE MARKED UP

RETAIL INDEX BREAKOUT... The S&P 500 Retailing Industry Group Index (plotted through Thursday) broke through its November high a couple of weeks ago and has been consolidating above that breakout point since then. That represents positive chart action. The relative strength line shows the retailing group starting to show new leadership since the start of February. The monthly bars in Chart 2 of the Retail Index show it actually challenging its all-time high reached at the start of 2000. A close in new high ground would be a very impressive accomplishment.

Chart 1

Chart 2

WATCHING WAL MART... The monthly chart of Wal Mart shows why I'm watching it very closely right now. The big retailer has been trading sideways since 2000 in what looks like a triangular pattern with bullish implications. The key chart point is the 60 level, which the stock is testing. A decisive close over that level would in my opinion represent a very bullish breakout and would signal a possible retest of the 2000 peak near 70. Needless to say, a bullish breakout in Wal Mart would give a big boost to the retail sector.

Chart 3

JC PENNEY RINGS UP BIG GAIN... The top weekly retail gainer was JC Penney. The monthly bars in Chart 4 show a stock just breaking out to a new four-year high. Although the monthly volume bar doesn't look that impressive, most of the upside volume took place on this week's breakout. Daily and weekly volume is impressive. The rising relative strength line also shows a stock that's showing market leadership.

Chart 4

TARGETING AN OLD HIGH... Target Corp has been another retail leader over the last month. The monthly bars show the stock trading at the highest level in nearly two years. It's also approaching a test of its early 2002 peak.

Chart 5

KOHLS AND TIFFANY ARE MARKED UP... A couple of retail laggards eneded the week on a very strong note. On Friday Kohls gapped up to the highest level in more than three months. The stock is trying to climb over its 200-day moving average. Its relative strength line turned up in early January. Tiffany enjoyed a high-volume markup at midweek. The high-end retailer is trading above its 50-day average and has broken a four-month down trendline. I've commented recently on monies rotating into consumer stocks. Although I was referring mainly to consumer staples, it seems some of that money is also moving into consumer retail stocks.

Chart 6

Chart 7