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Will Santa Clause be coming to town\?

HAVING TROUBLE PRINTING?
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Today's market action isn't that much different than what was found yesterday as stocks teeter-totter either side of unchanged levels, but have edged back above unchanged levels with 45- minutes left in today's trading.

There has been no economic data to help sway "market opinion" today, but tomorrow morning before the opening bell, November retail sales, weekly jobless claims, import/export prices will be released and provide some early morning turmoil.

With the holiday shopping season being "officially" launched the day after Thanksgiving, investors will be keeping a close eye on the November retail sales numbers, which economists and analysts polled look for total sales to rise 0.4%, while the ex-autos numbers are expected to show a more anemic 0.2% gain.

Ahead of tomorrow's number, the big three automakers have General Motors (NYSE:GM) $37.07 +0.32%, Ford (NYSE:F) $9.81 +1.87% and Daimler/Chrysler (NYSE:DCX) $33.71 +0.32% trading with marginal gains.

On the retail side of things, the S&P Retail Index (RLX.X) $279.70 -0.73% along with the Retail HOLDRS (AMEX:RTH) $73.30 -1.07% are off their lows, but have traded in a very tight range during today's session.

One retail stock that is showing some marked DIVERGENCE from the retailing group are shares of wholesale discounter Costco (NASDAQ:COST) $28.50 -2.86% which have broken to a 52-week low in today's session. Tomorrow is perhaps a "bigger" news day for COST as the company is expected to report earnings before the opening bell, in conjunction with the November retail sales data. If there's a stock that look "technically set up for disaster" then COST may fit the bill with a trade at $28.

Costco Wholesale - $1 box

Shares of COST currently trade with a bullish vertical count of $54, but a trade at $28 would negate that bullish count, trigger a triple-bottom sell signal, and have the vertical count turning initially bearish to $17. While it's got to be "nerve racking" for a bull to hold the stock into earnings with it breaking to a 52-week low, I suggest that bearish traders anticipating a break lower PRIOR to tomorrow morning's do so with 1/4 or 1/2 positions if anticipating a negative earnings report or gloomy outlook.

In recent weeks, I've placed some comments from various retail analysts that "liked" the broader-line retailers, but have been cautioning retail investors with regard to the wholesalers. Today, UBS Warburg made cautious comments on COST ahead of tomorrow's earnings saying their 12% growth forecast is under review as COST's market is 85% saturated, and the firm believes that management will have a more negative tone on tomorrow's quarterly earnings conference call.

Jeff Bailey

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