I’ve been fascinated watching the sentiment and price trends in publicly traded retail stocks over the last six months. Unless you have been living under a rock, you are probably aware that Amazon.com (AMZN) has been minted as the front-runner to take over just about every conceivable retail segment in the next decade. Their share price shows it too after crossing the $1,000 barrier and showing no signs of immediate distress.

If you love the internet shopping theme, but don’t want to just buy an individual stock, check out the Amplify Online Retail ETF (IBUY).  I did a review of it when it debuted a little over a year ago and the price trend since then (driven heavily by AMZN) has been nothing but spectacular.

More recently, my interest has shifted to the happenings in the rest of the retail space. A good representation of which is the SPDR S&P Retail ETF (XRT). This passive index fund tracks 100 well-known retail stocks in an equal weighted format. This structure allows smaller companies to have a bigger impression on the performance of the fund and prevent juggernauts like Amazon from skewing the return profile.

Obviously, the price trend of XRT has been ugly when compared to the Nasdaq-like ramp in IBUY. As you can see on the two-year chart below, this exchange-traded fund is within a dollar or two of its 2016 lows were the broad market made an important turnaround.

I think that this sector warrants watching for contrarians that believe brick-and-mortar stores are worthy of a turnaround. The value disparities aside, there is ample room for XRT to make a sizeable bounce even in the context of a longer-term secular decline. It just appears that the entire group is far more beaten down than strict fundamentals would dictate.

Another ominous sign is the recent filing by ProShares for several ETFs that bet long and short baskets of retail stocks. It’s not uncommon for these types of vehicles to be introduced at key inflection points in the market cycle.

On the flip side, it’s tough to argue with the current downtrend and overall volatility relative to the rest of the market. XRT is well below both its 50 and 200-day moving averages, which are generally considered ominous signs. It looks more like a falling knife that is ready to chop your hand off than a perfect spot to jump on a fresh trade.

Momentum has a way of continuing to exert itself until all the weak hands have finally been shaken out and everyone has turned their backs on the prospect of a rebound.

The market is telling us something.If you are a sector or single stock investor, this is an important one to watch at these levels.