Technical Analysis: Retailers advance slips back

14th May 2009 08:18

The retail sector has enjoyed a good move higher since the beginning of the year, over 500 points; however it does appear to have run into some selling interest above the 1,475 level, which was a significant resistance level, as indicated last month.Even though the sector managed to get above the 1,475 area, it was unable to close the week above it. The highs of 1,519 ultimately proved to be unsustainable, and subsequently moved lower on profit-taking as traders cashed in from earlier levels. If the FTSE continues to drift back off its highs, the retail sector as one of the primary drivers of the up move of the last few months will probably fall back as well. This is borne out by the failure of a number of key players to get through their resistance levels identified last month. Marks and Spencer: as can be seen from the graph below M&S failed to push above the previous lows around 352p, and its down trend line resistance from early 2007, currently around 368p. Next: the outperformer of the retail sector, it did briefly manage to get above its 2006 lows to get as high as 1,698p. It was ultimately unable to hold above these levels and after spending 4 days above 1,588p it has since traded back below it. The up move does appear to be a little over-extended and there is the possibility of a drift back towards the 1,400p area.Home Retail: despite a good attempt, the series of highs between 295p and 311p, in 2008 remained intact, with a high of 286p being the extent of the up move. There should be some level of support around the 230p area.Kingfisher: Like Home Retail, Kingfisher was unable to break above its previous lows, in this case the 2005 lows of 196.25p. Highs of 193.60p being the extent of the push higher. There is a support line around 174p, coming in from the March lows of 115p, and the danger here is a break could see a possible drift lower, towards the 150p area.For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2