Retail Stocks Bounce On Solid Earnings Reports
The market looked slightly weaker near the open, but has since firmed up a bit. Retail stocks are gaining on some solid earnings reports, housing stocks are higher on some good housing data, and tech stocks (semis) are simply leading the way.
The existing home sales report for April showed that home sales increased +2.9% month over month, which is above expectations and a nice turnaround from last month's -3.4% reading.
Among retail stocks, there were a handful of better than expected earnings reports this morning, including: Dollar Tree (DLTR), American Eagle (AEO), AutoZone (AZO), and Ralph Lauren (RL). All of those stocks are higher, expect for AZO, which is down. (note: AZO is a big target of the short sellers; I tried to short some last week and couldn't even borrow any shares)
Semi company CREE also raised guidance last night, and its stocks is seeing a huge bounce. On the flip side, ag company Monsanto (MON) gave downbeat guidance, and its stocks is -5% lower and weighing on the ag sector today.
In other news, GM is moving closer to bankruptcy, after bondholders wouldn't agree to big concessions in restructuring, and feel they would be better of in bk court. And Bank of America (BAC) has raised more capital, nearly the full amount suggested under the govt stress test.
Asian markets were nicely higher overnight, following our markets; the dollar is higher, weighing on gold prices, but oil is a bit higher; the 10-year yield is creeping up again, hitting 3.56% (a 6-month high); and the VIX is slightly lower, near 30.25.
Trading comment: The SPX is back into positive territory for the year, and closed slightly above that uptrend line I have been referring to. The Nazz is well above its 200-day right now. If the correction that so many have been looking for doesn't materialize soon, I would expect this to add to the performance anxiety on the part of the big hedgies, and could lead to additional upside pressure in the market heading into quarter-end (June 30th).
I am seeing more and more growth stocks breaking out, and need to force myself to spend more time studying these new names and not worrying so much about the day to day moves in the overall indices. I know that there are traders out there making a mint, and I don't want to be left out of the party (nor do my clients!).