Thursday, February 05, 2009

Retail Stocks Bounce Despite Mixed Retail Sales Reports

The market opened lower amid worries of job losses and more weakness in the financials. Banc of America (BAC) and Wells Fargo (WFC) are both down in excess of -10% in early trading, weighing on the bank index. But the brokers are bucking the weakness, led by Goldman (GS) and Morgan (MS).

Retail sales reports were mostly pretty weak, except for Wal-Mart (WMT) which surprised the market with a +2.1% rise in same-store sales. Despite the weak reports (I will try to post a wrap-up later), most retail stocks are higher. (URBN looks good for more of a bounce)

In earnings news, Cisco (CSCO) beat earnings last night, but lowered its revenue guidance for next quarter. The stock was down after hours last night, but is hanging in there this morning. Also, Visa and Mastercard (MA) both beat earnings expectations and those stocks are nicely higher.

In overseas news, the Bank of England cut its key lending rate from 1.50% to 1.00%, while the ECB stood pat at 2.00%, as expected. Asian markets finished mixed overnight, amid weakness in tech stocks following CSCO guidance.

The 10-year yield is slighly lower at 2.90%. The dollar is higher, but oil and gold are both higher today as well. Go figure. The VIX is also up slightly near 45, but still in a downtrend (positive factor).

Trading comment: I am still long my trading etfs, as well as gold (GLD). I would really like to see the SPX recapture its 50-day to remain bullish. But if the SPX closes below 800-815, it could indicate a retest of the lows is in the cards.

Tomorrow is the big govt jobs report that often moves the market. Consensus is for a bad number, so let's hope that is already factored into the market and stocks can hold these levels into the weekend.

long GLD, SSO, WFC


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