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Strong retail sales number, doesn't sway investors

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Retail sales jumped 0.8% in August, boosted by strong demand for autos, furniture and leisure goods. The 0.8% gain was far better than economist's forecast for a 0.3% gain. Excluding an extraordinary 1.9% gain in auto sales, total sales at stores and food services rose 0.4%, which was also stronger than economist's forecast for a 0.2% gain.

July's retail sales numbers were revised lower to a 1.1% gain from 1.2%.

Retail sales are up 5.2% in the past year. Excluding autos, sales are up 3.7%.

In other economic news, the Labor Department said producer prices were flat in August, with core prices excluding the more volatile food and energy components falling -0.1%.

In all, the economic data released this morning look positive with the consumer still willing to spend and little signs of inflation at the producer level. Some economist's feel that today's economic data should give the Federal Reserve hope that a double-dip recession can be avoided and should lower the volume of calls for lower interest rates. There were many economists who feared that consumers were about to throw in the towel as the economy struggles to emerge from its slump.

While stock futures rebounded modestly from their early morning lows immediately after the retail sales number were released, we've started to see a firming at current levels. September S&P futures are currently down 9.5 points at 897.80, NASDAQ futures are lower by 8.5 points at 914 and Dow futures are off 98 points at 8,280.

Fair value for the S&P 500 today is $1.70. That price will not change during the session. HL Camp & Company has their computers set for program buying at $3.00 and set for selling at $-0.54. Fair value for the NASDAQ-100 today is $6.50.

Option trader's will note that next week is triple-witching with index options expiring on Thursday and stock options expiring Friday. As such, the December futures are the roll forward contract. September also marks the end of the third-quarter so expect some volatility in the coming sessions and institutions, especially mutual funds get a little more active in the rebalancing and positioning of their portfolios.

Jeff Bailey
Senior Market Technician
Option Investor


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