Since the first quarter of 2003, the S&P Retail Index has been on a nice steady uptrend, bottoming around 250 in early 2003 to a recent historical high of 488.78 in July. That is a pretty decent return of about 95%. For the retail sector, it is excellent. But, over the trailing 12 months, the index has traded sideways between 420 and 480. The index is currently in an uptrend, but whether it is sustainable as it moves towards 480 is questionable.

 Just take a look at the retail sector. While there are some decent metrics, the overall picture remains largely mixed. For instance, the home renovation market continues to be relatively strong, as both housing permits and housing starts show no signs of slowing down, although higher interest rates may begin to eat into the numbers going forward as the Fed continues to increase interest rates.

 This week, we saw excellent quarterly numbers from both Home Depot Inc. (NYSE/HD) and Lowe's Companies, Inc. (NYSE/LOW). Target Corp. (NYSE/TGT) spoiled the party, however, on Tuesday, after offering a disappointing outlook for November. Rival Wal-Mart Stores Inc. (NYSE/WMT) offered a better forecast for the holiday season.

 You might have noticed the hesitancy in the market after the warning from Target. The point is, while the momentum in stocks is positive, investors continue to look for any reason to sell. After the recent surge in the first two weeks of November, the markets are now technically overbought.

 As we move into the key holiday shopping season, all eyes will be on the retail sales figures. The October retail sales reading was better than expected, as the core number rose 0.9%, well above the 0.3% estimate. The declining price of gasoline helped drive spending. Numbers across the retail board were positive. Now we will have to wait and see if the positive trend can continue into November and December.