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Retailers then paper\?

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At the opening bell my trade station triggered an upside alert on the S&P Retail Index (RLX.X) at 823 and has moved higher. In the past hour, the Forest/Paper products Index (FPP.X) triggered a similar alert. Bullish

Forest/Paper Products Index (FPP.X) - 60-minute interval

I've left some old trends on the chart of the FPP.X to help guide traders. The way I'd be using these trends is to help me in my account and trade management. With a longer-term upward trend broken to the downside, but a longer-term downward trend being broken back to the upside, I'd be willing to play this group long, but only with a half position. If index traders usually just buy one index option, then turn to a stock in this group, perhaps International Paper (NYSE:IP). If the index is going to push higher, then shares of IP should push higher too. If this index is able to get back on our upward trend near 318, then traders could average up to a full position and be targeting the 345 level.

S&P Retail Index Chart - 60-minute interval.

I don't have a photographic memory, but don't you think the chart of the FPP.X and the RLX.X look similar? If the FPP.X is on a two-hour lag time, I can use the technicals from the RLX.X to guide me. Both of these sectors should perform well to the upside if the economy were to grow.

Jeff Bailey
Senior Market Technician

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